Can Anyone Explain to Me What a Mortgage Credit Certificate Is? Is It Worth It?

I just refinanced my mortgage and no one mentioned such a product. Either it is a scam, a way for the mortgage company to make more money or a Texas thing.

Perhaps if you explained what it is we can help.

Ahh I googled it. http://en.wikipedia.org/wiki/Mortgage_Credit_Certificate So it is a muni tax credit that apparently some clever mortgage brokers can use to qualify you for more than you can afford. You do know that is how we all got in this mess in the first place?

This is not the federal tax credit that required you to stay in the home for five years.

I googled this because I have never heard of it and I have lived in TX, owned and built 3 homes, refi several times and no lender has ever mentioned this "perk".

If it is such a "perk" I think we would know about it because my hubby is very much into the numbers, financials, etc and we never pay any closing costs, points, escrow, etc for our mortgages.

I read online that you pay $75 for this certificate in order to claim a portion on your taxes only up to $2000/year. One top of that, at closing, you pay 1% of the total loan for this certificate. Let's say your total mortgage is $200,000 x 1% = $2000 due at closing along with the $75 so you are out $2075 from the get go and if you lose the certificate it is $50 for a new one. All that so you can claim a max of $2000 on your taxes? You just paid an extra $2075 for that "perk".

You already have tax benefits when you calculate the interest you pay each year on your taxes for FREE..... Why do you need to pay for what you can do yourself?

It certainly sounds fishy to me and way for the lenders to get more money out of you by promising you something that you can probably legally do yourself if you ask your tax acocuntant.

My red flag would be waving wildly if a lender mentioned this to me. I suggest you talk to your tax accountant and get all the details and fine print before you sign up for this.

Stay within your means (preferably below) and do not buy more than you can afford. Keep in mind all the extra costs of upkeep in a home as well.

Just say no...

Dawn

I understood it as being part of the stimulus package (which one, I'm not sure, lol) But it basically is an incentive to new home buyers.

I've never heard of it. Then again, it appears that I live in a part of the country where it's not available.

I looked at this website http://www.tdhca.state.tx.us/homeownership/fthb/mort_cred...

To me, I think you need to contact your tax advisor/accountant to see if it would be beneficial to you based on your personal financial status.

Like Jo W said, it allows you to qualify for a mortgage that you otherwise would not qualify for because they take the $2,000, divide that by 12 and consider that amount as "additional income."

This is exactly how we got into the housing/mortgage crisis in the first place with the use of the "interest only" loans. I would steer clear of this and only look to purchase a house you qualify for WITHOUT this messy credit thing.

STAY AWAY from this stupid program. I was a mortgage broker for over 20 years. Just like I wouldn't put anyone in a stated income mortgage or a 125% mortgage, I sure wouldn't put anyone in this program. Yes you will have to pay it back, nothing is free, even from the government and all their "everyone deserves to own a home, even if you cannot afford it" programs.

Please call or email Dave Ramsey...he has a website..hopefully you know who I am talking about. He is the only one I would trust to tell you the truth about and "Mortgage Credit Certificate" and the best way to buy a house in Texas.

I googled it and found a site from Texas that explains it really well. Nothing states it is only if you live for so many years. Just as long as it is your principle residence.

www.tdhca.state.tx.us