If you are buying a home in Michigan over the next couple months the MSHDA Mortgage Credit Certificate is definitely something you should know about. This is one of the lesser known ways to save big money on your mortgage and on your taxes at years end.
The MSHDA Mortgage Credit Certificate is NOT a one time tax credit, but rather it pays you back for the life of your loan as long as your home remains your primary residence.
How does the MSHDA MCC Tax Credit Work?
The basics: You pay a one time premium at closing to the State of Michigan. Then every year (you have your mortgage) you receive money back at taxes. Usually after the first 2 years borrowers will have paid off the initial cost of the Mortgage Credit Certificate and will begin saving.
Example: Assuming a mortgage of $100,000 at 4.5% interest, the annual tax credit would be:
$100,000 x 4.5% = $4,500
$4,500 x 20% = $900 annual tax credit
To figure out what you might save in the first year just plug in the estimated purchase price of your home and your anticipated interest rate. For more detailed information on receiving the MCC Tax Credit or figuring out the details call Carolyn Kruithoff with Treadstone Funding at 616-916-9078.
Mortgage Credit Certificate (MCC) Program Requirements
The MCC tax credit can be combined with conventional, FHA, Rural Development, and VA mortgage loans. Unfortunately MCC tax credits are not available with MSHDA loans themselves. The tax credit is for purchase business only and at this time cannot be combined with renovation mortgages.
- Buyers must meet household income requirements and purchase price limits apply
- Buyer cannot have owned any home in the previous 3 years unless they buy in a targeted area. . .then there is no restriction
The MCC tax credit is great for both first time home buyers and other home buyers because it offers a responsible way to save money on your mortgage.
*Carolyn Kruithoff is a licensed loan officer NMLS #533755.
This article is for informational purposes only and is not intended as tax advice. Contact your tax preparer for more information.