Who is paying for the two-month extension of the payroll tax cut working its way through Congress? The cost is being dropped in the laps of most people who buy homes or refinance beginning next year.
The typical person who buys a home or refinances starting on Jan. 1 will have to pay roughly $17 more a month for their mortgage, thanks to a fee increase included in the payroll tax cut bill that the Senate passed Saturday.
To cover its $33 billion price tag, the measure permanently increases the fee that the government-backed mortgage giants, Fannie Mae and Freddie Mac, charge to insure home mortgages. That fee, which Senate aides said currently averages around three-tenths of a percentage point, would rise by one-tenth of a percentage point under the bill.
For the holder of a typical $200,000 mortgage, that means their monthly housing payment would be about $17 higher.
The 0.1 percentage point increase will also apply to people whose mortgages are backed by the Federal Housing Administration, which typically serves lower-income and first-time buyers.
The higher fee would not apply to people who currently have mortgages unless they refinance beginning next year.