Kathryn Jean Keller

NMLS# 57801 • Mortgage Loans

Qualifying For A Mortgage Credit Certificate

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Qualifying For A Mortgage Credit CertificatePurchasing a house can be expensive, but there are measures in place to make it easier, particularly for people buying a home for the first time. One option is a mortgage credit certificate. What is the certificate, and how does it work?

A Mortgage Certificate Is A Tax Credit

A mortgage credit certificate, usually shortened to MCC, is a credit issued to first-time homebuyers by the local or state government. This certificate allows first-time homeowners to claim a federal tax credit for mortgage interest paid on the loan, with a limit of up to $2,000. When someone takes out a mortgage, the majority of the payments go toward interest. This credit certificate allows homeowners to recover some of the interest paid in the form of a tax credit.

Who Qualifies For This Credit?

Not every homeowner will qualify for this certificate. Usually, this is a certificate reserved for low-income people purchasing a home for the first time. Or, these credits are limited to people who purchase a house in a certain area. Usually, these programs are run by the states. Every state has a slightly different income limit for people purchasing a home. Everyone needs to check the local rules and regulations set by their states.

Is The Certificate Different From A Tax Deduction?

Yes, the mortgage credit certificate is different from a tax deduction. A tax credit is directly applied to the amount of money someone owes in taxes. In contrast, a tax deduction is a deduction from someone’s gross taxable income. A tax credit is better for tax purposes than a tax deduction. It is possible for someone to be awarded a mortgage credit certificate and deduct the interest paid on the mortgage from their taxes. Anyone who has questions about how deductions and credits work should work with a tax professional. 

Do Not Leave Money On The Table

It is true that purchasing a house for the first time can be a challenge; however, there are financial measures in place to make this process easier. Anyone who is buying a home for the first time should take a look at the state qualifications for the mortgage credit certificate program. This could help people save money on their taxes.

 

What Is A High Enough Credit Score For A Mortgage?

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What Is A High Enough Credit Score For A Mortgage?There are many people who are interested in purchasing a home for the first time. Even though many first-time homeowners are interested in the sticker price of a home, it is just as important to consider credit scores. Anyone who requires financing to purchase a home will have to go through a credit check. What credit score is considered high enough for a home loan? What do people have to do if they want to increase their credit scores?

What Credit Bureaus Do Lenders Use?

First, a credit score is a reflection of someone’s overall financial health. A lender wants to make sure someone has the ability to pay back a mortgage before they give that person a home loan. The higher someone’s credit score is, the more likely the lender believes he or she will have that loan repaid. 

In general, there are three major credit bureaus. They include Experian, TransUnion, and Equifax. Most lenders are going to run something called a triple merge (or a trimerge) when they check someone’s credit. This means the lender is going to check someone’s credit score with all three major credit bureaus before deciding if someone should receive a home loan. All three major credit bureaus calculate credit scores using the Fair Isaac Corporation, or FICO, numbers, but they calculate credit scores slightly differently. 

What Is Considered A Solid Credit Score?

Every lender has a slightly different metric, but a credit score less than 580 is considered poor. In contrast, a credit score over 800 is considered excellent. The maximum credit score someone can have is 850. If a loan is given to someone with a score under 620, this is considered a “subprime” loan. It is possible for people to qualify for a home loan with a low credit score, but they may be facing a higher interest rate.

Those who are interested in raising their credit score should pay all of their bills on time. It is also important for individuals to pay down as much of their debt as possible before applying for a home loan. This could help them increase their credit scores and get approved for a loan with a solid interest rate. 

 

What To Know About Property Values and Refinancing

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What To Know About Property Values and RefinancingThere are many people who are thinking about refinancing their homes. For example, some people may be interested in reducing their monthly payments, while other people may be interested in tapping into the value of the home to fund a home improvement project. What is the relationship between property values and refinancing? There are several important points to keep in mind. 

Property Values Tend To Rise

First, it is important for homeowners to understand that property values tend to rise during the life of a mortgage. For example, someone may purchase a home valued at $250,000. Then, fifteen years later, the home might be valued at $350,000. This might mean that homeowners have access to an extra $100,000 in equity. They might use some of this money to put towards a new home when they sell their current home. Or, they might refinance their home and access that equity to complete a home improvement project. 

Monthly Payments Might Go Up

If homeowners decide to refinance their houses and take all of the equity out of the home, they might be starting their 30-year mortgage over again. Then, because the property is worth more money, they may end up with a higher monthly payment. That is why homeowners need to work with a professional who can help them figure out how the refinancing process may impact their finances in the future.

Why Property Values May Rise

There are several reasons why property values may go up. First, there might not be enough homes in the local area. Therefore, the ones that are available might be worth more money. The popularity of a specific location might increase as well. There might be a new company moving to the area with attractive job opportunities. Finally, home improvements might also increase the value of the property. 

Why Refinancing Might Make Sense

There are several reasons why it might be a good idea to refinance a home. First, homeowners might use some of the equity to pay off existing debt, such as medical bills. Some homeowners like to refinance their homes to reduce their monthly payments with a lower interest rate. Finally, there are homeowners who refinance to complete home renovation projects. 

 

What Potential Homebuyers Need To Know About Buying Their First Homes

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What Potential Homebuyers Need To Know About Buying Their First HomesIt is exciting to purchase a house for the first time, but this is also a major financial decision. Therefore, potential homebuyers need to make sure they are prepared. What do potential homeowners need to know about purchasing a home for the first time? Learn more about this process below. 

Ask For Help From A Real Estate Agent

First-time home buyers always need to ask for help from a real estate agent. A real estate agent can help someone identify potential issues with a home that might have otherwise been overlooked. A real estate agent can also make sure potential home buyers do not overpay for a home. 

Always Get A Pre-Approval Letter

Potential home buyers also need to get a pre-approval letter from a lender. This is a letter stating that a potential home buyer has been approved for a specific loan amount for that specific property. A pre-approval letter will help someone’s offer appear more competitive, particularly if they are going up against a cash offer. This makes the seller more confident that the offer is not going to fall through on financing. 

Do Not Skip The Inspection

Some home buyers are tempted to skip the inspection because this costs more money. It is critical to get a home inspection done so that everyone is aware of the potential issues with the home. If there is a major repair identified, potential home buyers may ask to have this repaired before purchasing the home. 

Pay Down Other Debt

First-time homebuyers need to pay down as much of their debt as possible before applying for a home loan. This could make it easier to receive financing, and potential homeowners might receive a lower interest rate. Examples of other forms of debt include credit card debt, student loans, and car loans. 

Get The Money In Order

Of course, potential homeowners need to make sure they arrange their money prior to closing, but it is also important to get a down payment put together before looking for a home. Many sellers will ask for proof of funds before accepting an offer. Arranging funds prior to the search process can make this much smoother. This can also help first-time homebuyers compete with cash offers. 

 

Important Relationships During The Home Buying Process

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Important Relationships During The Home Buying ProcessPurchasing a home is an exciting time, but there is also a lot to manage. There are a lot of text messages, phone calls, and emails coming in. It is important for potential homeowners to keep them straight. Who are some of the most important people during the purchase process?

The Real Estate Team

First, there are going to be a lot of important people on the real estate side of this transaction. Every home buyer should work with a real estate agent who can help them assess the market, arrange showings, and find the right home. There might also be interactions with other agents along the way who represent sellers. Keep in mind that there may be assistants, secretaries, and other agents who are part of a real estate team.

The Mortgage Team

The vast majority of potential home buyers require financing. Therefore, there will be multiple people who work on the mortgage side of this transaction as well. There will probably be a loan agent, an underwriter, and multiple assistants who navigate this side of the process. The mortgage team might also be responsible for arranging a home inspection and asking for a home appraisal. Potential home buyers might have to work with these individuals as well. 

The Closing Team

If an offer is accepted, there will be a closing team as well. A real estate attorney will probably be required to process the documents. Therefore, a potential home buyer should be expected to work with multiple people from the law firm as well. The real estate attorney is responsible for collecting funds from all responsible parties and disbursing the money appropriately. There will probably be multiple assistants in the real estate attorney’s office who will be asking for information. 

Keep These Relationships Straight

There is a lot that happens during a real estate transaction, and it is important for a potential home buyer to try to keep these relationships straight. Remember that the real estate agent should always be the first point of contact with any questions or concerns. A real estate agent probably has connections throughout the area that can help home buyers make this process easier. Nobody has to go through this process alone. 

 

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