Mortgage Credit Certificates

In Maslow’s hierarchy of needs food, water, and shelter have the distinction of forming the base of all human needs.  In recognition of this, various entities throughout history have sprung up to answer this necessity that makes us who we are. All of us want to own a home that we feel can be a sanctuary for us and our families. Not only this, but in addition, part of American society and culture has placed a marker of adulthood by  encouraging young adults to find their own place to live.  Part of America’s answer are mortgage credit certificates.

While many sectors of the economy have recovered, many people are still struggling to find a way to come up with the money to buy a place for themselves.  With home ownership at near all-time lows due to millennials not buying houses, one of the pieces of commentary that has arisen around them is a pointed emphasis on their immaturity and lack of personal responsibility.  While this is the most negative connotation, there are other reasons why some have put off a home purchase.  Some may have had an addition to their families through marriage or having a baby (congratulations), and want to buy their first home to have a larger living space.  Wherever you fall on that scale, and your opinions of the life circumstances of millennials and other generations, there are always intelligent things to do.

The MCC is a state and local government program that is designed to help people buy and afford their first home.  The way it works is that it is a tax credit that applies to your mortgage interest.  As a bonus to this lenders will (often) consider mortgage credit certificates as extra income that they will use to help you qualify for the loan, since unlike a tax deduction, a tax credit has the economic effect of putting your former tax dollars back in your pocket.  For example a $1000 tax bite is reduced to $900 with a $100 tax credit thus making tax credits far superior to tax deductions.

Another positive about the MCC is that they can be used with other programs designed to lower the economic cost of buying a home such as a FHA or VA loan.  Combined, these programs can help you juice the numbers a bit and help you buy a bigger house, or a house in a nicer neighborhood.

I can imagine you might be saying, “Well wait a second, my parents always told me if something looked to be too good to be true, then it probably is.”  I’m right in that boat with you, and there are a few things that limit the MCC.  The credit as a rule, but there are exceptions, is for first time homebuyers, and the IRS limits the credit to $2000.  You also have to meet criteria such as not owning a home over the past three years, income restrictions, home price costs, and that you have to use the house as a primary residence.
If you qualify all you have to do is go on google and look at MCC programs in your state.  If you live in California for example you would go to this site here:   http://www.calhfa.ca.gov/homebuyer/programs/mcc.htm

Maslow identified shelter as one of our greatest needs in life for the simple reason that when you have no shelter you can freeze to death in the snow, or burn to death in the desert.  It provides us with a sense of belonging and comfort.  There is a reason why Robert Frost wrote, “Home is the place where, when you have to go there, they have to take you in.”  While that quote applies just as much, if not more, to family as to shelter, it should serve to illustrate the value that home has as an integral part of our lives.  By buying a house that we can afford, we can help give a more stable place to live in for our children, and keep more money in our pockets so that we can do more of the things that we want to do.

If you are interested in reading more Robert Frost poetry I highly suggest poetryfoundation.org.