Mortgage Credit Certificate Program

Mortgage Credit Certificate Option(MCC)Overview : 

Mortgage Credit Certificate Option(MCC)Overview

What Is An MCC? : 

What Is An MCC? Direct government subsidy in the form of Tax Credits that is equal to 20% of the all the interest paid on a home loan for life of the loan. A Tax Credit is a dollar-for-dollar reduction of your total federal income tax clients receive in addition to the stimulus money! Homeowners can adjust their federal income tax withholding to reflect the value of the MCC. Value of MCC must be considered by lender during loan qualifying. Homeowners receive the standard tax deduction for the remaining 80% of mortgage interest.

How Does It Work? (FHA) : 

How Does It Work? (FHA) Sales Price $ 375,000 Down Payment 3.5% $ -13,125 Base loan Amount (5% 30year fixed) $ 361,875 Total Loan w/ UF Mortgage Ins $ 368,207 Interest Paid Annually @ 5% $ 18,410 20% of Annual Interest $ 3,682

How Does it work? : 

How Does it work? 20% of Annual Interest $ 3682.07 Divide by 12 months in a year 1/12 = ? Monthly benefit to buyer $306.83 A first time buyer would receive a monthly tax benefit of $306.83 dollars a month to offset the cost of the home.

How Does it work? : 

How Does it work? Payment W/O MCC Payment with MCC This is the qualifying payment lending is obligated to use by law!

This client purchased a home with an FHA loan and a sales price of 375K@ 5%Total potential saving up to $78,867.17 : 

This client purchased a home with an FHA loan and a sales price of 375K@ 5%Total potential saving up to $78,867.17 20% of 394,335.86 = $78,867.17

Why Use An MCC? : 

Why Use An MCC? Real Life Case Study Denied by National Bank First Time Buyer Wants to purchase a home in the low 390K price range. Only qualifies for a purchase of 340,000.00 Denied by other lender! (need’s more income)

Slide 8: 

Maximum DU Loan Approval without the MCC $340,000.00

Slide 9: 

Maximum DU Loan Approval with the MCC *$395,000.00! *

Slide 10: 

PITI reduced by the amount of 321.24 based on the MCC

Processing an MCC : 

Processing an MCC Register for an approved class Upfront application (with signed disclosers) Need 3-years of your signed tax returns. Income documentation must show that income is within allowed limits Application gets turned in for approval Go shopping for the home.

THANKS FOR YOUR ATTENTION! : 

THANKS FOR YOUR ATTENTION! Paul J Scobee www.guildmortgage.net/paulscobee 206-455-0995 Entitlement Review