Tax Credits Still Available!

First Time Homebuyer Programs

Mortgage Credit Certificate Program –Funds Currently Available!
You probably know that homeowners receive a tax deduction from mortgage interest. But there’s another tax benefit you may not have heard about; a Mortgage Credit Certificate (MCC). This benefit is not another tax deduction, but a tax credit. A tax credit reduces your tax liability, dollar-for-dollar, unlike a tax deduction.

With an MCC, the qualified homebuyer is eligible to take a portion of the annual interest paid on the mortgage as a tax credit, up to $2,000, each year that they occupy the home as their principal residence. The amount of the tax credit is equal to the mortgage credit rate of 35% multiplied by the annual interest paid. This credit reduces the federal income taxes of the homebuyer, resulting in an increase in the homebuyer’s net earnings. Increased income results in increased capacity to qualify for a mortgage loan. The MCC has the potential of saving the MCC holder thousands of dollars over the life of the loan.

The example below assumes a family purchases a home for $120,000 at a 6.00% interest rate. Interest paid the first year is approximately $7,200. An MCC tax credit of 35% of the interest paid would equal $2,520 (35% x $7,200 = $2,520). However, the maximum annual credit allowable is $2,000.

Mortgage Amount
$120,000

Interest Rate
6.00%

Interest Paid
$7,200

MCC Rate
35%

Tax Credit
$2,520

In this example, the homebuyer would be entitled to a tax credit of $2,000.00. Any remaining credit amount, $520 in this example, may be carried forward in the subsequent 3 years. It is also important to note that the homebuyer will still be able to deduct the $5,200 ($7,200 – $2,000 credit) in interest paid when they file their taxes that year.

If the homebuyer chooses, they may file in advance a revised W-4 withholding form taking into consideration that this tax credit will provide the homebuyer with approximately $166.67 per month in additional disposable income ($2,000 divided by 12 months). If the homebuyer chooses not to revise their W-4, they may claim the benefit of their MCC when they file their annual tax return.

An MCC may make the difference between dreaming about your first home, and actually owning it. To see if you meet the basic requirements, please click on How to Qualify.

If you meet the requirements and decide to utilize an MCC, you will need to work directly with one of our approved participating lenders. An MCC is not a mortgage; but strictly a tax credit. One of our participating lenders will set the terms of the mortgage which includes the interest rate, down payment, underwriting criteria, discount points, and closing costs. In addition to these costs, there is a $100 MCC Application Fee (non refundable), a $250 MCC Closing Package Review Fee, and a MCC Issuance Fee of 1% of the loan amount.

-From Texas State Affordable Housing Corporation

 


 

Contact Janelle Carver, a MCC approved lender, today for loan approval!

  • Janelle has more than 25 years of experience in the industry
  • Offers streamlined service and on-time closings
  • Specializes in FHA, VA and first-time homebuyers
  • Has trusted guidance long after the loan closes

 

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