If you’ve been watching the debate in Washington, DC over the payroll tax, and if you are like most people, you probably have been wanted to see Congress get its act together and pass a bill. After all, I don’t know anyone – rich or poor – who is enthralled with the idea that their payroll taxes could go up starting January 1^st. But what you may not know is that if you are in the market for a new home, or if you are thinking about refinancing an existing home, the bill that was passed by the Senate last week is going to cost you. That’s right, the bill would transfer the cost of the payroll tax cut directly to those borrowing for a mortgage.

Buried within the bill passed by the Senate is a provision to increase the fees associated with federally guaranteed loans. But unlike the tax cut extension, which would currently only be for two months, and would only save the average family $166 in that time span, the fee increases would be permanent and for the life of the loan. The fees are specifically included to offset the costs of the tax cut extension.

The new fees would amount to an increase in monthly payments of $7.50 per $100,000 borrowed. In the Los Angeles area, especially in higher priced neighborhoods, the fees will translate into thousands of additional dollars that borrowers will have to pay over the life of their loan. For instance, on a $500,000 loan, borrowers would have to pay an additional $450 per year. Over a 30 year mortgage, that amounts to $13,500 in additional costs to the borrower.

Transferring the costs of the payroll tax cut to borrowers is an amazingly stupid idea for a number of reasons. Apparently the members of Congress for this missed a portion of the five years in which the beginning of the financial crisis started with a collapse in housing. They must have also missed the many recent reports that show that new home starts are very week. Since new home construction is a bellwether for economic growth and employment growth, it really doesn’t make any economic sense to impose fees that will only further depress the housing market.

The fees are also a bad idea because they would have a relatively small portion of society paying for a tax decrease that benefits everyone. Logic would dictate that there is a more equitable way to spread the cost of paying for the tax cut. Perhaps… I don’t know… they could pay for them by simply cutting government spending in other areas.

In any case, if you are thinking of buying a home, now would be a very good time to do so and lock in your loan. There is a very good chance that these fee increases will actually go into effect very soon. If you don’t want to get stuck paying thousands of dollars for a $166 tax cut, you need to move quickly. Roughly 9 out of every 10 mortgages issued by banks will be impacted by the new law if it does go into effect.

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