Mortgage Interest Credit

Depending on your annual income, you may qualify for a mortgage interest credit. In order to receive this credit, you will need a Mortgage Credit Certificate (MCC). The IRS will require the MCC in order to grant the interest credit so be sure to speak with a Loan Officer to find out if you qualify.

The Mortgage Credit Certificate allows first-time homebuyers to reduce tax liability dollar-for-dollar by a percentage of the interest paid on the mortgage. This credit can range from 20% to 35%, depending on the MCC program. However, any interest not included as part of the tax credit can still be eligible for home mortgage interest deductions on your federal tax returns.

If you purchased a home with the MCC this year be sure to have these handy when filing your taxes this season:

  • Mortgage Credit Certificate (issued directly after closing)
  • IRS Form 8396 (attach this to your 1040 form)

We recommend consulting with a tax professional so that you can best maximize your savings! And for additional information, contact one of our loan officers.

 

Can You Buy a Home With Student Debt?

According to The Institute for College Access & Success, about 65% of college seniors who graduated in 2017 had student loan debt. In Maryland, the average amount of debt was $29,314. Many potential homebuyers think with a mound of student debt it will be nearly impossible to purchase a new home. Luckily, there are options for those with debt to buy homes. The Maryland Mortgage Program created the SmartBuy 2.0 program, which helps qualifying homebuyers pay off student debt during the purchase of their home.

The terms are pretty simple.

You must have a minimum existing student debt of $1,000 and the loan must be in your name. The program offers up to a maximum of $40,000 in financing to be used towards paying off your debt. The full, outstanding balance of the student debt must be paid off as part of closing; partial loan payment is not permitted. The student loan may be in repayment or deferred status.

Financing for student debt relief will be in the form of a 0% interest, deferred loan with no monthly payments. The loan is forgivable over 5 years; meaning if you are still living in the property after 5 years, your debt is forgiven, repayment is not needed. If you choose to sell or refinance the property within 5 years, the remainder of the student debt loan will be due.

This is a great program to utilize if you are a first-time homebuyer and have accrued student loans over the past few years. Contact one of our loan officers today to see if you qualify.

 

*Student debt information pulled from the Institute for College Access & Success website: https://ticas.org/posd/home

 

What is Homebuyer Education, and Why Do You Need It?

Homebuyer education, also called housing or pre-purchase counseling, helps homebuyers prepare for the process of purchasing a home and the challenges of being a new homeowner. Some loan programs, like the Maryland Mortgage Program (MMP), require homebuyer education courses.

Recently, the Maryland Mortgage Program has made updates to their homebuyer education requirements to simplify and standardize the process. Effective for MMP reservations dated on or after October 1, 2018, the following will be implemented:

  • Homebuyer education may be taken online or in person, individually or with a group, as long as the class has been approved by HUD, Fannie Mae or Freddie Mac.
  • For Baltimore City and Baltimore County, the above flexibility will apply, but the homebuyer education must be completed prior to signing the sales contract.

The homebuying process is complex and if you are a first-time homebuyer (someone who has never owned a home, or has not owned a primary residence in the last 3 years) it can be a little confusing. This is why homebuyer education courses are so important. They help new homebuyers understand the process and what to anticipate as a homeowner. Below are some of the topics you can expect to learn about during your pre-purchase counseling.

  • Process of purchasing a home- You will be given an overview of the entire homebuying process, from application to closing, exploring each step more in-depth.
  • Budgeting- Buying a home will be one of the biggest purchases you will make, so knowing how to afford your mortgage and budget for extra expenses will be covered.
  • Shopping for a mortgage- Different types of home loans will be reviewed and what you will need for pre-approval. Your credit score, and ways to raise and improve it, will also be covered as a topic since this can help determine which type of mortgage and rate you qualify for.
  • How to maintain a home- Upkeep and regular maintenance of your home lowers the risk of major problems down the road; it is essential to know how to maintain your home and the budget you should keep for maintenance.

Even if you aren’t a first-time homebuyer, taking a homebuyer education course can be beneficial, since the mortgage industry is always changing and new programs are emerging. Additional one-on-one homebuyer counseling is available, and it is sometimes required, depending on the state/county you are purchasing in or loan program you are using. It’s better to have more information than not enough, especially when it comes to buying a home. Please reach out to any one of our loan officers if you have questions.

Breaking Down Homeownership Programs

Buying a home is a big, if not the biggest, purchase you are going to make. You may have heard there are a lot of costs when it comes to buying, and hearing the word “down payment” may strike a small sense of panic, but it doesn’t have to! There are many programs offered to help home buyers afford their dream house.

State Housing Finance Agencies offer state specific programs to residents who need help purchasing a home. These programs can be in the form of a loan or grant, and assist with closing costs, down payment, and even student debt relief.

A few of our most popular homeownership programs are geared for home buyers looking to purchase in the state of Maryland and Washington DC. Take a look below to see just a few options that are available.

DC Open Doors– DC Open Doors is a program offered by the DC Housing Finance Agency (DCHFA) and provides borrowers with options to purchase in the District of Columbia. Qualified first time homebuyers and repeat buyers are eligible for the program. DC Open Doors provides:

  • Down payment assistance loans (DPAL) available to qualified borrowers in the full amount of your required minimum down payment, requiring less up-front money out of your pocket.
  • DPAL is a 0% interest rate, 5-year forgivable loan, meaning you only have to repay the loan if you sell, refinance or no longer occupy the property within the first 5 years.

DC Home Purchase Assistance Program (HPAP) – Available to first time homebuyers providing assistance with down payment and closing costs. HPAP provides:

  • Down payment assistance up to $80,000 based on household income.
  • Closing costs assistance for 4% of the home purchase price or $4,000 (whichever is less).

Maryland Mortgage Program (MMP) – The Maryland Mortgage Program is offered by the Maryland Department of Housing and Community Development and provides borrowers with program options to purchase in the state of Maryland. The 3 main loan program types available through MMP are:

  • Grant Assist: Provides up-front financing to assist borrowers with down payment and closing costs. Grants do not need to be repaid.
    • Special Assistance Grant Program: Grant of $1,500 or $2,500 (depending on the Area Median Income). May be combined with other MMP conventional loans.
    • Flex 4% Grant: Grant of 4% of the first mortgage. May not be combined with other MMP programs.
  • Loan Assist: Provides up-front financing to assist borrowers with down payment and closing costs.
    • 1st Time Advantage 3% Assistance: No-interest second loan equaling 3% of the first mortgage. No payments are due on the second loan until the first mortgage is paid off, refinanced or transferred.
    • SmartBuy 2.0: Helps qualifying homebuyers pay off student debt during the purchase of their home.
  • Rate Assist: Provides low interest rate options for homebuyers which lowers the monthly payments.
    • Maryland Preferred Rate: Offered on 30-year, fixed rate loans. Cannot be combined with closing cost or down payment assistance.

There are also a number of other state specific agencies, such as Virginia Housing Development Authority (VHDA), Rhode Island Housing (RIH), and MassHousing, to name a few. It’s always a good idea to know all of your options, and which one is best before you take the plunge. All of our loan officers have a wealth of knowledge on each of these programs and will be able to provide you with additional information. Be sure to contact one of them today to find your best option!

 

*Conditions and guidelines vary depending on the agency

Special Assistance Grant Program from the Maryland Mortgage Program

The Maryland Mortgage Program has announced their new Special Assistance Grant Program to assist homebuyers with down payment and closing costs while purchasing a home.  The MMP offers a range of programs that help make purchasing and owning a home more affordable.  With this Grant, eligible borrowers will receive $2,500 or $1,500 (depending on the Area Median Income), which can be added on to the Maryland Mortgage Program’s existing programs.

Highlights of this product:

  • Grant of $2,500 for borrowers with income not exceeding 50% of the Area Median Income (AMI), Or a grant of $1,500 for borrowers above 50% and not exceeding 80% of the AMI
  • Used for both closing cost and down payment assistance
  • Conventional mortgages using Freddie MAC’s HFA Advantage™
  • May be used with other MMP products, such as Regular Conventional Loan Assist, Conventional Grant Assist,  Conventional Rate Assist, and 1st Time Advantage Loans
  • May not be combined with Maryland SmartBuy or refinance products
  • Regular down payment assistance may be layered with this product
  • Partner Match Program funds may be layered with this product
  • Maryland HomeCredit Program may be used (MMP will waive $450 MMP fee as an additional incentive)  
  • Must be purchasing in Maryland                 

          Income Eligibility Per County

     County                                Income Limit 80%/50% AMI                    

  1. Allegany                            $44,400/$27,750
  2. Anne Arundel                  $75,920/$47,450
  3. Baltimore                         $75,920/$47,450
  4. Baltimore City                 $75,920/$47,450
  5. Calvert                              $93,760/$58,600
  6. Caroline                            $57,040/$35,650
  7. Carroll                               $75,920/$47,450
  8. Cecil                                   $69,920/$43,700
  9. Charles                              $93,760/$58,600
  10. Dorchester                        $57,040/$35,650
  11. Frederick                           $93,760/$58,600
  12. Garrett                               $57,040/$35,650
  13. Harford                              $75,920/$47,450
  14. Howard                              $75,920/$47,450
  15. Kent                                    $59,680/$37,300
  16. Montgomery                     $93,760/$58,600
  17. Prince George’s                $93,760/$58,600
  18. Queen Anne’s                   $75,920/$47,450
  19. Somerset                           $57,440/$35,900
  20. St. Mary’s                          $82,720/$51,700
  21. Talbot                                $61,920/$38,700
  22. Washington                      $53,600/$33,500
  23. Wicomico                          $57,440/$35,900
  24. Worcester                          $57,440/$35,900

Want to see if you qualify for this Special Assistance Grant?  Contact one of our Maryland Loan Officers, today.

New Maryland Mortgage Program – 1st Time Advantage

The Maryland Mortgage Program (MMP) is offered by the Maryland Department of Housing and Community Development and provides borrowers with program options to purchase in the State of Maryland.  Currently, the MMP offers 30-year, fixed-interest rate mortgages while making down payment and closing cost assistance available to eligible homebuyers.  These assistance options make purchasing a home more affordable either in the form of a grant, or as a deferred, no-interest loan.

As of May 3, 2018, the MMP announced a new program – MMP 1st Time Advantage – that provides the lowest Maryland Mortgage Program interest rate to Maryland first-time homebuyers.  Additional features and requirements of this program are:

  • Down payment and closing cost assistance not available from MMP but assistance funds from external sources are allowed
  • Cannot be combined with other MMP products (including Partner Match, Homefront, HomeCredit or Refinance products)
  • Available to first-time homebuyers only (unless purchasing in targeted area or an honorably discharged veteran)
  • Homebuyer education required
  • Standard MMP eligibility applies

To learn more about the advantages of this program and other MMP programs, or how to get started, contact one of our Maryland licensed Loan Officers.

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