When you want some extra help in buying a home, there are several options open to you. One of them is through the use of a Mortgage Credit Certificate. An MCC is designed to let you claim a tax credit for part of the mortgage interest that you paid during a particular year. These types of credits are generally issued by local or state governments, to help borrowers who are lower income get into houses that will work for them and meet their needs. To get the MCC, though, you have to qualify. If you don’t need the right criteria, you won’t have the opportunity to get a credit, so it’s very important that you know what you need to do in order to be successful with your MCC opportunity. Here are three things you’ll need in order to qualify.
1). Have you owned a home in the last three years?
As you plan to buy a home, you’ll need to consider if you’ve ever owned one before. The credit is mainly designed for first-time home buyers, but can be used by others if they haven’t been homeowners recently. Most of the people who take advantage of the MCC haven’t owned a home in the past at all, but for purposes of the program you’re considered a first-time buyer if you haven’t owned a home in the last three years. That’s very important to consider, because you need to have at least three years of space between you and the last time you owned a home if you’re going to be successful in trying to get the credit. If it hasn’t been quite three years since the closing date of the last home you sold, hold off on applying for the credit.
Since this is a government program, they will check to see if you have owned a home, and if you’re providing truthful information about that home ownership. Fraudulently applying for the credit can get you into trouble and make you ineligible in the future. It could also cause a problem in that you might need to repay any of the money you were given through the credit, which could add up to thousands of dollars over a period of time. Don’t take that risk. Make sure you’ve not had any ownership interest in a home for at least three full calendar years before you apply.
2). What kind of income to you have?
The income you have will play a big role in whether you can qualify for the credit, too. If you don’t make a lot of money, you have a much better chance of being offered some assistance so you can buy a home. Depending on where you live, your income may be able to be a little higher than it would be in other locations. That’s up to the state and local government entities to set their guidelines, so you’ll need to check with them to see if you qualify for the program. If you are low income and receive other types of state benefits because of that, the chances are good that you have an income that will help you qualify for the credit.
There are also restrictions on the purchase price of the home you’re buying. If you want to purchase a home that is too far outside of the standard price point for your area, you most likely won’t be able to get a credit for that. In short, what you want to buy must be realistically priced for the area and for your income, or your MCC will generally be denied. By choosing a house that’s close to affordable for you, you may be approved. The MCC works by letting you use part of your mortgage interest amount as income, so you can qualify for a house. That means that the home you purchase has to be something you could come close to qualifying for without the credit, since the credit will only make a small to moderate income difference.
3). Are you going to live in the home you’re buying?
When you use an MCC to buy a home, you’ll need to live in it. By living in the home you’re buying, you may be eligible for the credit. If you want to use the credit for a vacation home, second home, or investment property, those options aren’t available to you. The goal of the MCC is not to help people who can already afford to own one home, or to let investors expand their real estate holdings. It is to be used only for helping first-time home buyers and lower income people who have not owned a home in at least three years. If you fall into that category, you may want to explore the MCC and see what it can offer to you. For people who qualify, it’s a valuable resource.
The credit can be thousands of dollars per year, which raises a person’s income level enough to let them buy a modestly priced house. It can also help them on their taxes, and they can keep getting the credit every year. As long as your income stays roughly the same and you continue to live in the home you bought, you’ll continue to receive the credit. That’s good news, because it helps a person who gets into their own home avoid losing it because they no longer have the needed income to pay the mortgage.
