Legislation Changes You Need To Understand

Legislation changes always need to be considered as you are assessing future financial decisions. Below you will find information on mortgage and tax law changes that may impact you.....

“G‐Fee” Added to Mortgage Loans
While mortgage interest rates have steadily declined over the past month, this trend will make an immediate reversal as lenders implement a “G‐Fee” increase. Fannie Mae and Freddie Mac require lenders to pay a “G‐Fee” on every loan they guarantee in the secondary market.

“Remember, every action has an opposite reaction”

The government has implemented an increase on this guarantee fee in order to supplement the payroll tax cuts of 2011 & 2012. This ultimately increases the interest rates borrowers will receive on new home loans. Remember, every action has an opposite and equal reaction. Anytime our government spends money or cuts taxes, it has to be paid back with extra costs elsewhere.

Tax Cuts Expiring After 2012
Several key tax cuts are set to expire at the end of 2012. I have listed a few of the highlighted tax cuts below:

1. Reduced tax rates on all income levels
   
2. Reduced taxes on long‐term capital gains
   
3. Repealed limitations on personal exemptions
   
4. Repealed limitations on itemized deductions
   
5. Expanded refundable credits & education incentives
   
6. Reduced estate tax liabilities
   
7. Reduced payroll taxes for employees
   

While Republican nominee Mitt Romney vows to extend the tax cuts mentioned above, Barack Obama has indicated he intends to extend some of the cuts, with modifications. Both candidates seem willing to extend at least some cuts. 

In summary, these are all legislation issues you need to be aware of for your 2013 tax & mortgage planning. If you have further questions on the specifics of these changes and how they affect you, feel free to contact me any time…I’m here to help!!