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I'm curious why you think first-time buyers should be exempted from a transfer tax.
Also, what is offensive about PMI? I don't pay it, but not everyone has an adequate down payment.
It seems preferable to have the option rather than demand 20%, or more, down, from all buyers.
Yes, there are other mortgage programs available, but sometimes PMI can be the less expensive solution.
First of all let me say that when I orginally posted on this thread I did not realize it was the seller being charged the transfer tax as the newspaper article link states. I thought maybe the buyer paid that tax.
So based on this assumption I suggested first time buyers be exempt to help them get into a house. Of course, on further thougth I would say first time buyers are exempt if there home purchased is below a certain amount. This amount could be adjusted yearly for inflation and increased home values. I certainly don't think a first time buyer who can afford a 400K house should be exempt.
PMI, fortunately we only paid PMI for about the first year of home ownership. Our home increased greatly in value the first year and then rates dropped so we refinanced and got rid of PMI all at once.
PMI is a legal rip off. In my mind it's a mofia like tax. PMI protects the mortgage company if you can't make good on your mortgage payments and have to forclose. HOWEVER, the lender is just going to sale your house and collect and pay off the loan w/ the sale of the house. Where I've always owned, housing prices have gone up so much yearly that the mortgage lender would never be out money if they had to repo and sell. They would be making more than the origianl loan.
I get it if people have bad credit or if they live in an area where property appreciates slowly or not at all, Buffalo, NY comes to mind.
This may have changed since we first got a home loan, but then people who put 5% down on a 200K house (0% down was unheard of back then) were charged the same PMI as someone who put down 18%. Of course, you can argue that if you put down 18% in a few months you will be at 20% and can apply to have PMI removed. We found that w/ our lender BofA at the time you had to use their apprasier and pay an extra fee. It was going to be $800 to get PMI removed. But like I said we refi-ed instead.
Lastly, I has to say if the 1% transfer tax fees goes through and sellers have to pay it THEN more than likely housing "values"/ prices will go up 1% overnight. The buyer will still pay this fee in the cost of the house. BUT if you tax the BUYER instead then it's possible to either exempt first time buyers under a certain amount or give a tax credit to people who make under a certain amount. THEN this is a tax for the middle class and up, not the working class who are trying to buy into the American Dream.
BTW, has anyone heard if this tax is deductible from State Income taxes like property taxes?
Let's cut back all the "excesses" in government FIRST, then if we still don't have enough money for worthwhile projects like roads, schools, parks etc, then let's talk about tax increases.
In theory I agree. But in practice the most critical programs get cut first. The safety nets for the poor, the schools, the roads, the parks, etc. Let's face it, the excess benefits the companies, people, organizations that make the largest campaign contributions. And which are they going to cut? I'd put good money on the safety net programs for the poor and schools.
Or maybe politicians only do it this way in Oregon.
We have the 1% transer tax here in NH (you know the supposed tax free state) anyway I believe the seller and buyer split it here. I would have to look at the last house I sold but I thought that is how it was here. Maybe NC is going to do it differently. I still don't like it - on top of the commission taken off it adds up to more money taken away from the seller and more money the buyer has to shell out here.
In theory I agree. But in practice the most critical programs get cut first. The safety nets for the poor, the schools, the roads, the parks, etc. Let's face it, the excess benefits the companies, people, organizations that make the largest campaign contributions. And which are they going to cut? I'd put good money on the safety net programs for the poor and schools.
Or maybe politicians only do it this way in Oregon.
Dear PDX, let me respectfully say that it is your type of thinking that allows corrupt politicians to remain in office. Generally, politicians care about one thing, and one thing only....getting re-elected!! If the masses were able to organize enough to become a "political force to be reckoned with" then they wouldn't be able to cut the "safety nets for the poor".
PDX, politicians "work for you" and their actions should be dicated by you as a member of the voting public. Not the other way around!!
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"PMI is a legal rip off. In my mind it's a mofia like tax. PMI protects the mortgage company if you can't make good on your mortgage payments and have to forclose. HOWEVER, the lender is just going to sale your house and collect and pay off the loan w/ the sale of the house. Where I've always owned, housing prices have gone up so much yearly that the mortgage lender would never be out money if they had to repo and sell. They would be making more than the origianl loan. "
PDX,
Of course, PMI benefits mortgage companies. The Buyer is paying to insure the Mortgage company against the higher risk of loan loss.
Oregon may vary from the case in other parts of the country.
Try a visit to the Courthouse auction in Raleigh when 10 or 15 properties go off.
The banks buy almost all of them for the amount of the outstanding balance. That is often more than retail market value, because when homes go into foreclosure, typically there is no equity or the home has been damaged to the point it is not marketable at retail.
So, despite hordes of investors who want to buy/flip foreclosures, there are no bids.
And often you will see the bank selling later at a much lower price once reality sinks in.
PMI covers the mortgage loss, but not the holding costs.
The NH transfer tax is paid by the seller. I suppose it could be split via a negotiated arrangement between buyer and seller, but why would the buyer want to do that in a buyers' market.
I am not a market analyst, but even though a transfer tax is a tax on the seller, there is no way to limit the cost to the seller alone. If I am the seller, sure I am the one writing out the check to pay the transfer tax, but I will do my best to incorporate that additional cost into the price of my house when I sell it thus raising my listing price. Everything in real estate is negotiable so there is no guarantee I will get it from the buyer, but nonetheless it has increased the original listing price of my home. If enough people selling homes do this it will become the norm and the market will shift upward over time to reflect this new tax. In general I don't see how the consumer doesn’t eventually carry the burden of any additional tax on a transaction.
I am withholding my judgment on whether or not this tax is actually needed until I can read and learn more about it. But I think the fundamentals of who would be paying this proposed tax are clear.... The consumer.
The point of these fees is to pay for the impact of growth. Sales of existing homes has nothing to do with growth. The number of residents stays the same. Sales of new homes is what causes growth and an increase in population.
So the tranfer tax is taxing the wrong thing. The impact fee is the way to go.
Also, impact fees have the added benefit of increasing the equity of existing homes.
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Quote:
Originally Posted by jbognar
I have to agree with Bull_City_Rising.
The point of these fees is to pay for the impact of growth. Sales of existing homes has nothing to do with growth. The number of residents stays the same. Sales of new homes is what causes growth and an increase in population.
So the tranfer tax is taxing the wrong thing. The impact fee is the way to go.
Also, impact fees have the added benefit of increasing the equity of existing homes.
This is almost the dictionary definition of "Shut The Door Behind Me."
Tens of thousands of people in Cary alone, and many more in the rest of Wake County have paid little or nothing for the growth we have brought.
We have reaped the appreciation, and want to piggyback on the backs of new folks for added equity because they are "growth."
Niether Impact fee nor transfer tax is appropriate for the local situation.
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