Homebuyers Get Another Kick in the Fannie

Homebuyers Get Another Kick in the Fannie

I’m telling you, it’s the last thing we need right now. Just when the Laguna Beach real estate market is awakening from a slumber full of tossing and turning, just
when interest is heating up for all those bargain-priced Laguna Beach homes for sale, what happens?

Homebuyers get another kick in the Fannie.

What I’m ranting about is Washington’s latest sleight-of-hand illusion—the
new ‘back door tax’ bundled into Fannie Mae or Freddie Mac loans. At first glance, the additional .125% you’ll be paying for those loans looks like a drop in the bucket. Just a few pennies, right? WARNING: Don’t be fooled by the seemingly harmless amount. Here’s the real, behind-the-scenes story ...

Let’s say you buy an Orange County home with a $500,000 mortgage. Thanks to the ‘miniscule’ back door tax, your monthly payments will rise by $36. A pittance, you say? A mere trifle?

Well, guess what—over the life of a 30-year loan, you will have paid $13,220 extra to Uncle Sam! Still think it’s a trifle?

Apparently, Washington has deleted the promised spending cuts from its to-do list.
Instead, the government will subsidize its recent tax credit with the back door tax, effectively wiping out all your gains. Nice.   

Don’t Expect Transparency

You’ll have an easier time prying gold from a gumball than spotting the backdoor tax in your loan docs. You see, banks representing Fannie Mae and Freddie Mac bury the backdoor tax deep, deep into your interest rate. As of February 7, all lenders have factored this increased fee into their rate sheets. But just try finding it.

Shift the Burden

Remember, Fannie and Freddie loans cover amounts up to $729,000. Therefore, the people getting slammed by the backdoor tax are the recipients of these loans—the good old middle class. As usual, the affluent are off the hook.

Quite naturally, both Republicans and Democrats deny responsibility for a tax measure that clearly boosts the cost of buying Laguna Beach real estate, or any other property in the United States. But it’s all just a smokescreen. Clearly, it’s time to stop deceiving the people. Shift a big chunk of the tax burden to the wealthy. Target big businesses such as British Petroleum, and slap all job exporters with a tax on work sent overseas. Hitting a newly-recovering housing market is pure economic folly, and a crushing blow to the middle class.

What do you think about the recent back door tax? Good, bad, indifferent? I’d love to hear from you, so feel free to fire off your comments below.

And, of course, The Coastal Property Experts will be delighted to answer any of your questions and help you discover the wealth of opportunities waiting for you in the Laguna Beach and Orange County real estate markets.

Connect with our team at 949-415-6786 or hillary@thecoastalpropertyexperts.com.  

Sunny Days and Smooth Sailing!