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Mortgage Credit Certificates - 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.
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| 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.
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| 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.
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Copyright 1999 Inman News Features
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