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First Time Buyers
The Mortgage Credit Certificate (MCC)
Program
 Landmark Financial is one of only
10 companies approved to do the MCC program in Ventura County.
Many real estate agents are not familiar with
it, so permit us to show you what advantages this program brings
to a first-time buyer.
The MCC program provides a double bonus
for you. It increases the loan amount you qualify for
and it increases your take-home pay. The MCC entitles you to
take a federal income tax credit of 20% of the annual interest you
pay on your home mortgage. Because the MCC reduces the
federal income taxes and increases your net earnings, it is a great
help in qualifying for your first home mortgage. But it
doesn't stop there. The MCC is registered with your federal
income taxes each year as long as you live in the home.
MCC funds are usually awarded to the
county early in the year and may be depleted by fall. Check
with the MCC office or Landmark Financial to insure funding will be
available when you need it. You apply for an MCC
only while escrow is open, not after your escrow has closed.
Here is how the MCC
helps. Assume a tax payer with a $75,000 annual income buys a condo
for $350,000 and a 5.25% interest rate. Interest paid the
first year is approximately $18,000. An MCC tax credit of 20% of
interest paid would equal $3,600.00 (20% of $18,000). Here is how
this looks:
| |
With MCC |
Without MCC |
|
Annual Income |
$75,000 |
$75,000 |
|
Personal Exemptions |
-3,650 |
-3,650 |
|
Interest Deduction |
-14,400 |
-18,000 |
| Taxable Earnings |
$56,950 |
$53,350 |
| |
|
|
|
Tax From Table |
$10,425 |
$9,525 |
|
MCC Credit |
3,600 |
0 |
|
Total Income Tax |
$6,825 |
$9,525 |
The same taxpayer owes
$2,700 less with an MCC than without one ($9,525- $6,825 = $2,700).
That taxpayer can subtract the $3,600 from their total federal
income tax liability, receiving a dollar for dollar savings. (A tax
deduction is subtracted from the adjusted gross income before
federal income taxes are computed. Therefore, with a
deduction, only a percentage of the amount deducted is realized in
savings).
Of course, the savings will vary
depending on the sales price, interest rate, and the borrowers
income.
MORE ABOUT MCC:
Recapture Tax: if you sell the
home within nine years you may have to pay a recapture tax.
The tax, if any, will always be the lesser of: half the gain from
the sale of the home, or a tax based on a somewhat complicated
formula. There are several conditions which can exempt you
from the recapture tax. Call the MCC office or Landmark
Financial for more details on the Recapture Tax.
Targeted Census Tracts: certain census
tracts within the limits of the MCC program are designed as "low
income". If you purchase a home in one of these areas the
first-time homebuyer requirement is waived, and income and price
limits are higher. A list of census tracts identifying the
targeted areas are available from the MCC program office.
Mortgage Financing You Can Use With MCC:
includes new FHA, VA or Conventional loans. No bond backed
financing such as CHF A or Cal Vet loans are allowed. If you
obtain a combination first and second trust deed financing, the MCC
applies to both loans.
HOW TO QUALIFY:
MCC PROGRAM LIMITS
|
Max Income: |
Non-Targeted |
Targeted |
|
1-2 persons: |
$86,100 |
$103,320 |
|
3+ persons |
$99,015 |
$120,540 |
| |
|
|
|
Max. Purchase Price: |
|
|
|
Resale: |
$586,721 |
$717,104 |
|
New: |
$612,558 |
$748,683 |
|
Duplex: |
*$660,247 |
|
|
*Duplex must be at least 5
years old |
From August, 2009
-
 The household income and the purchase
price must not exceed the limits shown above.
-
You must not have owned a principal
residence in the last three years.
-
You must occupy the home.
-
You must apply for the MCC through a
participating lender (Landmark Financial) and pay a non-refundable MCC application fee of 0.0025 times the loan amount to the county of
Ventura.
-
You must purchase a single family
detached home, condominium or townhouse within the program
boundaries. (All of Ventura County is acceptable).
-
You must meet the lender's requirements
for the first mortgage.
If you have any questions about this
program, please contact Pat Borton or Dan O'Brien at Landmark
Financial (805) 650-4999, or check on the web at
www.ahahousing.com.
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