Are you – or do you know – a first time home buyer? If so, Great Midwest Bank has a program that will definitely catch your eye. Great Midwest Bank is one of the few lenders offering a Mortgage Credit Certificate (MCC) Program. Mortgage Credit Certificate (MCC) Program is a tax credit available to first-time home buyers here in Wisconsin. The credit is available for both WHEDA and conventional loans. The program provides a special tax credit to qualified applicants which reduces federal income tax liability for as long as they have the mortgage.
Who Is Eligible?
You’ll be surprised to hear that not only first time homebuyers can take advantage of
this great program. Veterans as well as those purchasing in federally designated target area are also eligible. To be eligible, you have to meet the following criteria:
- Home must be used as primary residence for the life of the loan.
- Home must be an owner occupied single family, condominium, or a 2 unit that is 5 or more years old.
- Borrower must fall within the income and purchase price limits.
- Borrower must be U.S. citizen or permanent resident.
- At least one applicant signing the first mortgage note must complete a WHEDA approved home buyer education program.
How Does It Work?
Assume a first time homebuyer has a conventional mortgage of $142,500. The interest on the loan for the first 12-months would be about $6,000. If determined eligible for MCC, the applicant could claim a tax credit of 25% of the interest amount paid, or about $1,500, in the first year. This credit would reduce the amount of federal income tax they would otherwise owe when filing their federal tax return. It is the same process for veterans and those buying in the target area; but they can actually claim up to 40% of annual interest paid. It is important to note that any borrower’s annual mortgage tax credit cannot exceed $2,000.00.
Is There A Cost?
Yes, there is a small one-time cost for qualified borrowers. It is $150 for WHEDA loans and $600 for conventional fixed rate loans. However, the benefit clearly outweighs the cost. Using the example above, if the borrower stayed in that home for 5 years they would have already saved up to $7,500!
It is easy to see how beneficial and cost effective this program can be for borrowers that qualify. If you or someone you know is interest contact one of our experienced loan officers. They would be happy to provide you with more information and/or determine if you are eligible.