Written By: Caron Witherspoon, Loan Officer with Fairway Mortgage and Member of CCAR's Affiliate Committee
Did you know that if your borrower is a first-time homebuyer, they can apply for a mortgage interest tax credit? It reduces their federal income taxes every year by allowing them to get a percentage of what they spent on the mortgage interest back as a tax credit. Giving them more available income to qualify for a mortgage. Because the tax credit refunds a portion of the mortgage interest, it also effectively reduces the mortgage interest rate. To qualify, the borrower must meet certain income requirements and the home must meet certain sales price restrictions.
For example, if the mortgage interest is $10,000, and the homeowners qualify for a 20% tax credit, that would equal out to $2,000. (Please keep in mind that the maximum credit varies by program.)
The borrower can use the MCC every year for as long as they live in the home. This can save thousands of dollars over the life of the loan.
You can only apply for the credit before you close on the home. Contact a participating MCC Lender to find out more.