Riverside County (CA) in its effort to promote homeownership for First Time Home Buyers has rolled out a series of programs designed to assist Low and Moderate Income families achieve their dream of homeownership. This is the fifth in a series of posts about these programs. For more information on the County programs, visit the County website: www.rchomelink.com
First Time Home buyers already have the $8000 Federal Income Tax Credit (Note: You have to be closed on your home by November 30, 2009 to receive the credit) and the $10,000 Tax Credit for New Home buyers in California (If this is you, you better get moving they are almost out of money). WANT MORE? 
The Riverside County Mortgage Credit Certificate (MCC) program is another tax credit that enhances the ability of First Time Home Buyers to qualify by effectively increasing your “home buying power”. Plus, it’s a credit you have year after year. Check out the table below for an example.
What is a MCC? A Mortgage Credit Certificate (MCC) entitles qualified homebuyers to reduce the amount of their federal income tax liability by an amount equal to a portion of the interest paid during the year on a home mortgage. The Riverside County MCC Program provides for a 15% rate that can be applied to the interest paid on the mortgage loan. A new homeowner can claim a tax credit equal to 15% of the interest paid during the year. Since the borrowers taxes are being reduced by the amount of the credit, this increases the take-home pay by the amount of the credit. The buyer is still able to take the remaining 85% interest as a deduction. When underwriting the loan, a lender considers this and the borrower is able to qualify for a larger loan than would otherwise be possible.
To receive immediate benefit of the MCC tax credit, the homebuyer would file a revised W-4 withholding from their employer to reduce the amount of federal income tax withheld from his/her wages, thereby increasing their take home pay.
If you elect not to revise your W-4 you would see a dollar for dollar reduction in your tax liability for the year.
Consult your tax professional for the best option for you.
The MCC program is not limited to First Time Home buyers. A non-First Time Home buyer may be eligible if they are purchasing within a Riverside County designated Target Area. Information on Target Areas is available on the EDA Website: www.rivcoeda.org
How do I apply for a MCC? – Borrowers must apply for a MCC through a participating lender who will perform an initial qualification and assist the borrower in completing the MCC submission forms. The lender then submits the MCC application to the County., and when approved will issue a MCC commitment to the lender.
To further enhance all of the Riverside County Programs the MCC may be used in conjunction with the other Riverside County Homeownership Assistance Programs.
