What the payroll tax cut could mean to homebuyers

One of the methods being thrown around by Congress to pay for the payroll taxcut is raise the fees that banks pay Fannie Mae and Freddie Mac to guarantee home loans.  Specifically there are “guarantee fees” that cover mortgage defaults in the housing market.  What this does is allow banks to pass on the increased fee onto borrowers in the form of higher interest rates on mortages.  Though this method has bi-partisan support, it could further weaken an already slow housing market.

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