Monday, February 10, 2014

What is a Mortgage Credit Certificate?



This program was authorized by Congress in 1984 and is designed to help the first time home buyer or anyone that hasn't owned a home in three years. But what is a mortgage credit certificate?  The Mortgage Credit Certificate or MCC will offset a portion of their mortgage interest over the term of the loan as a way to help home buyers qualify for the loan. It is a tax credit and not a tax deduction.  So it reduces the amount of federal income tax you would have to pay and thus increases your income and enables you to qualify…. Pretty cool right?

Here’s some requirements;
1.    Buyers must not have owned a home in the previous three years.
2.    Buyers must meet income and purchase price restrictions.
3.    Buyers must intend to use the new home as a primary residence.
4.    The federal government considers the MCC tax credit to be a subsidy so you may be subject to federal recapture tax IF you sell your home within the first 9 years, you sell at a gain or your income increases above the allowable limits.

Yes there are some income limitations, but they seem to be pretty high so I don’t think that will be an obstacle for most, you’ll have to check your county to see what they are in your area. Plus there are purchase price limitations but overall this is a fantastic program for the first time home buyer.

For more information on what is a mortgage credit certificate and how it can help you qualify for a home loan contact your local state or county housing department or a qualified mortgage professional in your area or by all means please call me. 

IRS link for even more info;

Roxy Redenbaugh
ACMC Loan Consultant
Certified Mortgage Coach
Branch Manager
NMLS #269926
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