Does cutting mortgage rates help borrowers? – Know more

mortgage repaymentOnce the mortgage interest rates come down, homeowners can now claim much lesser amount of money for meeting their monthly mortgage repayments. Researchers have noticed this reaction on several occasions while making their calculations.

An amount worth up to $2000 can now be claimed for yearly mortgage repayments by homeowners if the rate allowed by their state is over 20%. However, it changes from one state to another. The amount that can be claimed by mortgage lenders each month to homebuyers offset a certain part of the mortgage interest.

Benefit of mortgage credit certificate

Mortgage Credit Certificate (MCC) is a tax credit offered by the Federal Government. It is not a tax deduction. Certain requirements need to be fulfilled by homebuyers in order to avail this benefit. Their withholding can be adjusted for ensuring a monthly savings advantage, so that they don’t have to wait for tax filing. Till the time the property is occupied and owned by the borrower, he can avail the MCC.

Once you know your mortgage interest, you can easily count your tax credit to be 20% of it. You’ll be paying an interest worth $3,000 as tax credit if you carry an interest worth 5% on a mortgage worth $300,000.

A tax credit isn’t the same as a deduction. A tax deduction is applicable on your adjusted gross income, while your tax credit is applicable on what Uncle Sam owes from you in the form of tax liability. For a period of three years, you may accumulate this MCC credit if you don’t possess adequate tax liability. In order to make MCC more beneficial for your finances, you’ll need to discuss it with your Tax Advisor or CPA.

Qualifying for mortgage credit depends on the following criteria –

  • Need to be a home buyer for the first time. It means that the home buyer hasn’t owned any home during the past 3 years.
  • Primary residences that are occupied by owners
  • Income limitations are applicable
  • Cost of acquisition is applicable
  • Recapture tax may be applicable
  • Education for home buyers is necessary
  • May be enjoyed alongside Home Advantage and other WSHFC mortgage programs
  • Must involve a lender who is approved by the WHFHC.

Mortgage slowdown

The NJ mortgage rates news shares the withdrawal of more borrowers from the market even when the rates are falling. The Mortgage Bankers Association has shared a 5.5 percent drop in submission of mortgage applications in the recent times. While the purchases were dropped by 4 percent, refinances were also reduced by 7 percent.

A bright future is expected by some of the home builders. Soon after the month of April saw a 9.8% increase in housing development permits, there was an 11.8% increase in May. This has been stated in the latest report shared by the federal government. In comparison to April, the month of May saw an 11.1% fall of housing starts. It showed us through a revision from its highest of the last 7 ½ years.

Image Credit: American Advisors Group

About Manmohan Hebbar

I am the founder and director of 01webdirectory.com and chief editor at 01webdirectory.com/blog. I also run 01webmarketing.com, a search marketing firm. I have been a search engine marketing specialist since 2001. Besides SEM, I take interest in diverse subjects and try to express them through this blog.

Share and Enjoy !

0 0

Leave a Comment

Your email address will not be published. Required fields are marked *