Headline: Tax savings available with new county program
Thanks to a new program, qualified home buyers in Eagle County will save more money with their mortgage interest payments, county officials say.
The Mortgage Credit Certificate program, beginning Dec. 19, allows first-time home-buyers to take 20 percent of their mortgage interest payments as a dollar-for-dollar credit against their federal income taxes.
“In an area where housing costs are so high, this is a valuable tool in enabling households to purchase homes,” says David Carter of the Eagle County housing department. “It benefits the home-buyer in two ways: It stretches his buying power; and it helps him to qualify for a loan.”
Depending on a lender’s criteria, Carter says, the program can increase purchasing power up to $35,000.
“That could be the difference between buying a condo or a townhome,” he says.
This tax saving also can be taken into account in the underwriting process of a loan so that people who previously would have been ineligible for a mortgage could now be found eligible.
“The program is for first-time home-buyers or somebody who hasn’t owned a house in three years,” Carter says.
Other requirements include: the maximum purchase price can’t exceed $225,000; the home has to be in the county; and the home has to be used as a primary residence.
To qualify, Carter says, the income limits for one to two people in a household is $59,300; if there are three or more, the limit is $68,000.
Because the early days of a mortgage payments are mostly interest, Carter says the new program can lead to substantial savings. For example, if a family is paying $1,000 a month on a new mortgage, this family could save $200 a month, or 20 percent, through the Mortgage Certificate Credit program.
Those qualifying can get their tax witholdings reduced by presenting the certificate, or they can wait until they file their taxes to get the credit, Carter adds.
“This is a much stronger benefit than the usual Schedule-A deduction,” Carter says.
Those who qualify for the certificate will still be able to take the usual Schedule-A deduction for the remaining 80 percent of their interest payments, Carter says.
“The difference with the deduction and a credit is that the latter is a dollar-for-dollar credit. The deductions depend on somebody’s tax rate,” Carter says.
The county also offers a program, currently suspended until January for lack of funds, that helps residents with their down payment.
“The program will last until the county uses the allocation,” Carter adds.
Eagle County has entered into an agreement with the Colorado Housing and Finance Authority to administer the program. In order to participate, a lender must attend a training session provided by the Colorado Housing and Finance Authority.
“This program also has two benefits to the lender,” Carter says. “First, it will allow lenders to do previously undoable deals with their customers. Second, there is a fee to compensate the lender for processing the slightly additional paperwork required.”
For a list of participating lenders, call 328-8770.
Veronica Whitney can be reached at 949-0555, ext. 454, or at email@example.com.