Mortgage Credit Certificates Equal Tax Savings

Posted by on Monday, July 13th, 2015 at 10:28am.    1027 Views

Mortgage Credit Certificates Help Buyers

mortgage credit certificatesMany would-be buyers are held back from making a home purchase for a variety of reasons, the bulk of it financial.

There are a great number of programs and loan products that can take a buyer from impossible to possible when it comes to buying a home, MCC programs are just one of them. And a great way Realtors can help would-be-buyers see their dreams come true.

In addition to having the necessary down payment, and funds for other miscellaneous expenses like inspections, one item that troubles many buyers when approaching a lender is their debt-to-income ratio, specifically the ratio of the expected housing expense in relationship to the income.

Q: What are mortgage credit certificates?

A mortgage credit certificate, or MCC, makes it easier for eligible buyers to qualify for a mortgage loan. Offered by many city and county governments, they allow first-time buyers to take advantage of a special federal income tax write-off. 

Under MCC programs, the lender can reduce the housing expense ratio – the percentage of gross monthly income applied toward housing expenses – by the amount of the tax savings. Normally, lenders reject loans if the housing expense ratio is too high.

Wikipedia has a great example of how this helps buyers. You may want to check out our Real Estate Blog for more helpful Buyer Articles in addition to Mortgage and Finance Topics.

Program requirements for MCCs vary, although most adhere to the following guidelines:

  • The buyer must live in the home being purchased with an MCC-assisted mortgage.
  • Total household income cannot exceed certain limits.
  • The buyer cannot have owned a principal residence within the past three years. This restriction may be waived if a property is purchased within a certain targeted area.
  • The purchase price must fall within an established limit.

Q: How do I take advantage of an MCC?

Your real estate agent (a good one) keeps a number of lenders with various loan products in their back pocket for referring. Not every situation is the same and loan products and services vary. Your real estate agent is a one of the best resources to utilize to explore ways of making a home purchase a reality.

If you're shopping for a home in SW Ohio, Dayton to Cincinnati, I'll be glad to point you in the right direction.

There are a good number of other ways to save money or find means of purchasing if you're borderline. OHFA (Ohio Housing and Finance Authority) can knock 2.5% off a down payment for instance and the savings can be even more if you're buying through OHFA.

If you're buying via FHA financing with 3.5% down, that leaves you to come up with only 1% for a down payment. Ohio Hero's program for military, police, teachers, paramedics, firefighters etc. can knock a quarter of a percent off your home loan. City and county grants can offer upwards of $25,000 for a home purchase and USDA and VA offer no money down financing.

If you'd like to talk about your options, feel free to reach out, happy to help.

1 Response to "Mortgage Credit Certificates Equal Tax Savings"

Greg Hancock wrote: That's my biz-pardner, always trying to save people money, :)

Posted on Saturday, July 25th, 2015 at 7:08pm.

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