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©
2002 Ruth E. Campbell. |
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Frequently Asked Questions Mortgages
- Q & A Q: What is the Mortgage Credit Certificate program?
A: The Mortgage Credit Certificate program allows first-time
home buyers to take advantage of a special federal income tax
credit. This program allows buyers credit in qualifying for
the tax advantage they'll receive after they purchase the home. The amount of the credit is tied to a local formula that every
city with an MCC program must follow. An MCC credit, which can
total $2,000 or more, reduces the borrower's federal tax liability
by an amount tied to how much one pays in annual mortgage interest.
Both the borrower's income and the purchase price of the home
must fall within established guidelines. To see if your community has an MCC program, call your local
housing or redevelopment agency. You also may inquire with your
real estate broker or the local association of Realtors. Q: Are there tax credits for first-time home buyers?
A: Many city and county governments offer Mortgage Credit
Certificate programs, which allow first-time home buyers to
take advantage of a special federal income tax write-off, which
makes qualifying for a mortgage loan easier. Requirements vary from program to program. People wanting to
apply should contact their local housing or community development
office. Here is a list of four general requirements to keep in mind:*
Some credit may be claimed only on your owner-occupied principal
residence. *There are maximum income limits, which vary by locality
and family size. * You must be a first-time home buyer, which
means you must not have had any kind of ownership interest in
a principal residence during the past three years. This restriction
may be waived, however, if you are buying property within certain
target areas. * Allocations must be available. A local MCC program
may have to decline new applications when it runs out of funds. Q: What are the rules for mortgage credit certificates?
A: To qualify for a mortgage credit certificate, both
your income and the purchase price of the home must fall within
established city guidelines. These guidelines vary by city but
generally only permit people who earn an average income or slightly
higher than average income. A limited number of cities have authorized the MCC program.
Contact your municipal housing department for more information. |