“You can’t fight City Hall” has been part of our vernacular for years. Basically, it is an admission that you have no power to make change, or fix something you feel is unjust and needs correcting. Trust me, I am in the mortgage business and understand this feeling of helplessness all too well.
Imagine beating your current market interest rates by 1% if you qualify for a relatively unknown tax strategy. And it’s legal, by the way! Do I have your attention?
Well, if you are a first-time home buyer and you don’t mind filling out a few extra forms, this tax credit can save you thousands. It’s a Mortgage Credit Certificate (MCC) issued by certain state and local governments that allows a taxpayer to claim a credit for a portion of the mortgage interest paid during a given year.
Let’s talk about the difference between a “tax credit” and a “tax deduction”. A tax credit is a dollar-for-dollar savings that lowers your total federal income tax liability by the value of the credit. Whereas, a tax deduction only reduces a percentage of the amount deducted. We are talking quarters versus dollars here. Tax credits can be more valuable than deductions, although somewhat more difficult to qualify for. Continue reading
The Energy Efficient Mortgage (EEM) is one of the best kept secrets in our business. Why? Because most people have no idea what it is and don’t want to invest the time to learn about its’ cost saving powers. In a world of sound-bites, tweets, and bumper-sticker one-liners, who has time to learn about energy-efficient mortgages? Boooring…
Why should you care about an EEM? Congress mandated a pilot program in 1992 (that went national in 1995) to help homebuyers or homeowners borrow more money to help pay for energy-efficient improvements or upgrades. The result is an energy-efficient home with lower monthly utility bills and a decreased footprint on the environment. And it’s all done without tapping into your savings.
You can finance these energy-saving features to new or existing homes as part of a FHA or VA insured loan. The goal here, is that the money you save on your energy bill from these improvements (i.e. duct sealing, new windows, energy-efficient water heaters, new heating and air-conditioning systems, etc.), will exceed the slightly higher monthly mortgage payment.