If you are buying your first home, there may be even more tax credits available to you. The Mortgage Credit Certificate (MCC) from the NC Housing Finance Agency can place more money in your pocket, making your mortgage payment even more affordable. The MCC allows eligible buyers to take a federal tax credit of 20 percent of the mortgage interest you pay annually. It can save you up to $2,000 each year you own your new home.
What does this all mean? If you borrow $183,000 at 5.5% interest, you will pay approximately $10,000 in interest for the first year of your mortgage. With the 20% MCC, you can reduce your federal income tax liability by $2,000 for that year, allowing you to reduce your monthly tax withholding by $166. That is $166 more per month in your paycheck! Over the first 10 years of home ownership, you would save $18,547 in federal taxes. As with most mortgages you can also claim an interest deduction on the remaining 80% of the interest you pay.
This combined with the $8,000 tax credit offered by the federal government, this is a great time to buy!
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