Ryan Spellerberg: Fan of the Mortgage Credit Certificate

Mortgage banker Ryan Spellerberg, of First Premier Bank in Sioux Falls, is a big fan of the Mortgage Credit Certificate (MCC). He originated the very first MCC mortgage when SDHDA made the new enhancement available in 2013. He's been originating MCCs to first-time homebuyers ever since.

"I'd say about 94 percent of the people who are eligible are taking advantage of it," commented Spellerberg. "Only a couple of borrowers have decided not to participate in the program."

The MCC, which is paired with SDHDA's First-time Homebuyer program, allows borrowers to recoup 20 to 40 percent of their mortgage interest as a tax credit, every year for the life of the loan. The dollar-for-dollar tax credit is different than a tax deduction, which reduces the adjusted gross income on your tax return. With the tax credit, that 20 to 40 percent goes back to you. If you change your W-2 form at work, that money will show up immediately on your paycheck.

Spellerberg said clients sometimes balk at the idea of paying a slightly higher interest rate, typically about an eighth of a percentage point, but the long-term savings of the MCC more than make up for it. "If we've got someone who has doubts, I can bring up an amortization schedule and show them how much they will save," said Spellerberg. "I don't know why you wouldn't take advantage of this."

Jeremy Fink of Sioux Falls didn't need a lot of convincing. He was the borrower who received the first MCC mortgage in South Dakota. "Ryan explained that I would get 40 percent back on the interest I'd pay," Fink said. "That's pretty much all I needed to hear."