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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:

$89,300

$107,160

3+ persons

$102,695

$125,020

     

Max. Purchase Price:

   

Resale:

$665,088

$812,886

New:

$665,088

$812,886

Duplex: *$660,247  
*Duplex must be at least 5 years old
      From May, 2012
  • 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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Equal Housing Lender
1280 S. Victoria Ave. #180, Ventura, Ca. 93003
Phone: 805.650.4999 - Fax: 805.650.4997 - Email: CustomerService@LandmarkLender.com
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