What is the Mortgage Credit Certificate Program?

Mortgage Credit Certificate (MCC)

Mortgage Credit CertificateMore popularly known as the MCC, a mortgage credit certificate is a taxpayer privilege in the US in which the local government issues the said certificate so that the taxpayer can claim tax returns for a part of the mortgage interest paid throughout the whole year. Think of it as a tax refund geared especially toward your mortgage. The premise of this first time home buyer program is for applicants to get a chance to qualify for a loan by giving them the opportunity to offset a part of their total mortgage interest. In short, this serves as some sort of additional monthly income which is used as proof of capacity to pay.

How Do You Qualify for a Mortgage Credit Certificate?

Not all taxpayers, however, qualify for MCC and there are a few criteria to consider if you are thinking of applying for one. Since it is a program meant for those buying a house for the first time, one is automatically disqualified if he has owned a home in the last three years. There is also a provision requiring potential beneficiaries to have a certain amount of fixed income, as well as the ability to meet purchase price restrictions. The new house in question should also be declared as the principal residence.

Most of these conditions are waived in time of great need such as after a devastating natural disaster. In any case, it still remains to be dependent on the decision of the local government involved.

How Do You Apply for a Mortgage Credit Certificate?

Everyone needs a helping hand, even more so those who would be purchasing a house for the very first time, and this helping hand could not come in any better form than that of financial aid. If you qualify for such a certificate, then by all means go and apply for it. By obtaining this certificate, you could expect to qualify for bigger loan amounts, which could translate to a larger first home, depending on what you want and need. If you’re interested in getting a mortgage credit certificate, you can ask for assistance from a reputable real estate agent in your area as most of them are knowledgeable about this.

Using an IRA Withdrawal for Down Payment on a Home

IRA Withdrawal for Down Payment

People wanting to purchase a new home today have to come up with larger down payments then they used to have to. Recent economic woes have forced lenders to tighten lending requirements and reduce risk. The days of getting into a home with little to nothing down comes at the cost of higher interest rates or rejected applications.

IRA Withdrawal and Mortgages

Banks are often wanting a substantial down payment. Often they would like to see twenty percent or more used to secure the mortgage. Few people have this money easily available to them. But there is a resource that many people do not think about.

Your IRA is a potential source of those higher down payments. But you must understand the implications of using your IRA withdrawal for such a purpose. Selling that individual retirement plan may seem like a great idea, but you need to keep some things in mind.

IRA Withdrawal and Age

If you are not 59.5 years old, you will be charged an immediate ten percent penalty for early IRA withdrawal. The amount withdrawn will also be reported as income on your taxes. States vary but you may even find the state leveling taxes and penalties on an early withdraw of funds.

There are ways around these tax and penalty implications. The IRS publication 590 lists exceptions to the penalties and taxes. First time home buyers are often considered exempt, however it is always best to make sure that you fully qualify by checking with the IRS.

IRA Withdrawal For First Time Home Buyers

It is important to remember that these IRA withdrawal exceptions are almost exclusive to first time home buyers. Generally the home must be residential and not commercial or rental. Tax laws are subject to change, especially at the local and state level, so you should consult with a tax adviser on the exact implication of using your IRA for the down payment of a home.