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2008 SETH MCC Program What is an MCC? The Mortgage Credit Certificate (MCC)Program was authorized by Congress in the 1984 Tax Reform Act as a means of providing housing assistance to families of low and moderate income. It is an alternative to the bond (MRB) program. The MCC is a tax credit that reduces the amount of federal income tax paid and provides additional available income to help qualify for a mortgage loan and assist with the new house payment. The SETH MCC is available to buyers purchasing a residence in SETH’s jurisdictions and meeting required household income and purchase price limits. Buyers may be subject to paying a federal recapture tax if they do not remain during the recapture period (usually 9 years.) A Mortgage Credit Certificate (MCC) provides a federal income tax credit to the borrower for as long as they own and occupy their home. Tax credits are a powerful way of increasing a family’s annual income. What does an MCC do? The federal government allows each homeowner to claim an itemized income tax deduction for the amount of interest paid each year on the mortgage loan. A deduction reduces the amount of income that is taxed. The MCC Program takes a portion of the mortgage interest paid and turns it into a tax credit. A tax credit is an amount returned to the buyer either by increasing the amount refunded in their tax return or decreasing the amount of taxes owed. Because they are good for the life of the loan, an MCC may save a homeowner thousands of dollars as long as the certificate holder is living in the home. MCC’s may be used with any loan type EXCEPT an MRB loan. Highlights of the 2008 SETH MCC Program • The 2008 SETH MCC • The maximum tax Program provides a credit a homeowner tax credit of 30% of can claim is limited the interest that the to $2,000. homeowners pays • Unused tax credits annually on their can be carried mortgage loan. The forward for up to 3 credit may be taken years to offset annually or monthly. future income tax liabilities. Example Of The Tax Credit Provided By The SETH MCC Program: Loan Amount= $100,000 Interest Rate= 6% Homeowner pays $6,000 in mortgage interest that year MCC Tax Credit Rate= 30% As a result, the homeowner receives an MCC Tax Credit= $1,800 ($6,000 x 30%) First Time Homebuyers using the SETH MCC Program may qualify for a $2,000 Grant. Can I Use The MCC Program? You should answer “yes” to all of the following questions. Am I buying a home in one of the SETH jurisdictions Am I able to qualify for a mortgage loan with a participating lender? Is my income under the established limits based on location of the home and family size? Is the sales price of the home under $237,031? How is the Lender Involved? Lenders basically are making mortgage loans- just like they do everyday. A borrower can use any of the lender products available in the market place. Lenders retain the servicing on the loan. The MCC’s are not issued directly to the homebuyer. Buyers must obtain financing from local lenders who choose to participate in the program. What are the benefits? • Additional tax credit each year (up to $2,000 annually) • Tax credit can be used to help qualify for your mortgage loan • MCC is assumable and may help you sell your home in the future • $2,000 Grant for 1st time homebuyers How do I get started: Get started today by contacting a participating lender from the list provided on our website. If you have any questions, you may call us directly at 281.484.4663.
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