Written By: Dan Moralez, Staff Writer, MortgageCurrentcy.com.
It seems like as much as things have changed in the mortgage business, they stay the same. It never ceases to amaze me how the products we used to use are making a come back in today’s lending environment. Mortgage Credit Certificates (MCCs) are such a product.
An MCC is a dollar for dollar tax credit on a borrower’s federal tax return. This credit is used to offset a tax liability. That means in order to get the full benefit of the credit your client must have a tax liability at the end of the year. This liability is “washed” away by the tax credit.
Most borrowers create a tax liability by changing their withholdings out of their paycheck. That means more money in every paycheck. Because the amount of tax withheld from the borrowers check is decreased, this should lead to a tax liability at the end of the year. The tax liability is able to be washed away dollar for dollar by the MCC credit.
Read examples on how it works. Download copies of the IRS Forms, IRS Publication 530 and Mortgage Talking PointsTM flyer for your real estate agents.
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