03 AugTax Credit Available to First Time Home Buyers Again

Colorado Housing and Finance Authority’s (CHFA) Mortgage Credit Certificate (MCC) Program is back! (wow that was a mouthful).

Unlike the one time $8,000 tax credit provided by the Federal Government to stimulate home buying in 2009 and 2010, this tax credit keeps on giving.

The MCC program is available to:

• first time home buyers
• non-first time home buyers in targeted areas
• eligible veterans (either first time buyers or not)

How it Works

MCC  allows the homeowner to claim 20% of the mortgage interest paid during a tax year as a dollar-for-dollar deduction from their federal taxes.  The remaining 80% of the mortgage interest may still be calculated as an itemized deduction.

The tax credit may be used annually as long as the homeowner owns and occupies the home as their primary residence or until they refinance.

CHFA has provided an example comparing two federal tax returns – one without MCC and one with.  Here is a quick snapshot of the customer:

• $50,000/year income
• 30 year fixed mortgage
• 6% mortgage interest rate
• $140,000 mortgage
• $1,100/year in property taxes

Refund without MCC:  $286

Refund with MCC: $1532

What Else You Should Know

• You do not have to obtain a CHFA first mortgage to be eligible for the CHFA MCC
• The cost of the program is a one time fee of $700 at closing
• You must work with a CHFA MCC approved lender (yes we are one of them)
• MCC users are subject to a recapture tax
  • If you have a CHFA 1st mortgage CHFA will reimburse any recpature tax that is required to be paid

If you a potential first time homebuyer in Colorado and would like to investigate the MCC program we would like to help you navigate the path to get this tax credit.  Just contact us and let us know you are interested and we will help you out.

What do you think?

Leave a comment and tell us what you think about the MCC program.

• Do you think it is a good program?
• Is it too confusing?
• Does it cost too much at closing?

About the Author | Scott & Marla Wynn

Scott & Marla Wynn are mortgage lenders with a focus on education. We believe an educated customer is our best customer. The mortgage industry has complicated the process of obtaining a mortgage so much that most customers believe the best way to select a mortgage lender is to inquire about rates and fees. Although rates and fees are an important part of the mortgage process, there are much more important areas to be concerned with. Lending A Hand was created to pass along our experience, knowledge and research to YOU to allow you to become a more educated mortgage customer. If you are planning a home purchase or refinance and live in the state of Colorado, we hope you select the Wynn Team as your mortgage lender!