GSFA MCC Program Puts Cash Back in a Homeowner's Pocket
Curious as to how much one can save with a GSFA Mortgage Credit Certificate (MCC)*?
Check out the example below, based on a $200,000 loan amount.
Comparison of Savings "With" and "Without" an MCC:
|Without GSFA MCC||With GSFA MCC|
|Approximate Annual Interest||$9,000||$9,000|
|GSFA MCC Rate (1)||N/A||20%|
|Annual Tax Credit (2)||N/A||$1,800|
|Monthly Mortgage Payment||$1,013.38||$1,013.38|
|Monthly Credit Amount (3)||N/A||$150|
|"Effective" Monthly Mortgage Payment (3)||$1,013.38||$863.38|
(1) The Mortgage Credit Rate is specific to the individual MCC program. The GSFA MCC Program features a 20% MCC.
(2) The Annual Tax Credit in the above example represents an estimate of one full year of interest payments on a 30-year fixed rate mortgage. The Annual Tax Credit will change each year as it is based upon interest paid on the remaining principal balance during the term of the mortgage loan.
(3) The Monthly Credit Amount represents the Annual Tax Credit divided by 12 months ($1,800/12).
MCC Can Also Help Homebuyer Qualify for the Initial Mortgage
In addition to qualifying for a tax credit every year the homeowner remains in the home and pays mortgage interest, the Lender can actually use the estimated tax credit to help when calculating a borrower's debt-to-income ratios during the initial mortgage loan qualifying. In this way,
the MCC can actually increase the homebuyer's purchasing power.
To receive immediate benefit of the MCC tax credit, the homebuyer has the option to file a revised W-4 withholding form with their employer to reduce the amount of federal income tax withheld from his/her wages and increase their take home pay by the Monthly Credit Amount.
* The GSFA MCC Program was formerly known as the CHF MCC Program.
Golden State Finance Authority (GSFA) was formerly known as California Rural Home Mortgage Finance Authority or CRHMFA Homebuyers Fund (CHF). A formal name change is pending.
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