The Federal Deficit: How will this affect you?

By: Felix-Torres Colon, Executive Director, NHS of Baltimore

Many Americans consider the Federal deficit to be the most important economic problem of our time. In response to this problem, the House of Representatives has proposed a series of cuts in the housing field that are draconian. We are not taking a position on the need for a balanced budget or the reining in of government spending, but we thought all of you should know what impacts some of these proposed cuts could have on NHS and our community.

Community Development Block Grants (CDBG)

CDBG is a federal program that funds a wide variety of community and economic development programs at the local and state level. The program offers local and state governments a wide latitude of ways to invest these funds. They are used to fund everything from housing counseling to infrastructure improvements. The House has recommended a 63% cut. If passed by the Senate, the NHS would have to lay off over half its staff. We would no longer be able to help families become homeowners, stop foreclosures or lend to clients.

Housing Counseling

The need for fair unbiased information about home buying is greater than ever. The economic crash was driven by bad mortgages to uninformed borrowers. Counseling is one of the proven ways to avoid this event from happening again. The House has zeroed out the counseling budget, this means NHS would have to lay off the majority of counselors. Hundreds for families would no longer be able to get the training they need to make the best decisions for their future.

Home Affordable Modification Program (HAMP)

The House is currently considering ending the program. Although this program is not perfect, it can be fixed. HAMP is currently one of the best tools we have to prevent foreclosures. If HAMP is abolished, hundreds of families in Baltimore will lose their homes.

These are tough times which call for tough decisions, but they have to be smart decisions.

Housing: How To Invest Your Tax Return

By: Raevyn Jones, Marketing Coordinator, NHS of Baltimore

Whether or not you have filed your tax return, how you will spend your tax refund always comes to mind around this time. Investing some money from your tax refund is one of the best ways to spend it. However, before you make the decision to invest your tax return, you should think about how your refund fits into your investment strategy. For homeowners or people looking to become homeowners, this refund could have a long term impact.

One of the biggest things you may want to consider when thinking about investing is your housing fund. In order to receive the best possible interest rate on a house and avoid private mortgage insurance, it is smart to have a good amount of savings for your down payment. Other programs and housing incentives can assist you with your down payment.

Using your tax refund to eliminate current debt is another good investment if you are looking to buy a home. Eliminating debt with the highest interest rate will cost you less money in interest in the long run. With current credit card interest rates usually being 14% at the minimum, paying off your debt is an excellent investment. The higher your credit score, the better deal you will be able to get on a house.

If you are a homeowner, investing in your home may be the best investment that you will ever make. There are many affordable ways of investing your tax refund to increase the value of your home. Upgrades and improvements to the kitchen or bathroom are great ways to maximize a return on the investment of your home. This investment could prevent major problems down the road as your house gets older. Also if for some reason you ever choose to sell your home, you have increased the value of it. Renovations to your home may also be written off on your tax return for the following year.

Another good investment for homeowners is paying down the principal of your mortgage. Contributing additional money to your mortgage will allow you to pay the loan off sooner and you can save thousands of dollars in interest over the life of the loan. Interest rates are currently lower than ever, so if you are eligible to refinance your hope this may be a good option as well.

Although a tax refund cannot change your future by itself, it can have a long-term financial impact. For more ideas on how to invest your tax refund, you may want to opt to take a free financial fitness class.

It’s Never Too Early: Kids Can Be Financially Fit Too!

By: Raevyn Jones, Marketing Coordinator, NHS of Baltimore

It should come as no surprise to anyone that there are many benefits to saving money at a young age. Children can use this money to save for college, back-up savings for adulthood, or even to buy their first car. Although saving money is not easy, it may be easier to for children to risk the temptations than adults.

With the current state of our economy, many kids are making the decision to save money at a young age. I believe that as soon as children begin to receive allowance, parents should initiate a savings plan. This plan should consist of long term goals and short term goals.

The first step to saving money is setting a savings goal. This goal will determine how much you save every week or bi-weekly when you receive your allowance. An effective way to determine your savings goal is to figure out how much you want to have by a certain date. For example if you want to save at least $300 a year, your savings goal would be roughly $25 per month.

After the savings goal is initiated, parents should open up a savings account for their child. Because of the lower fees credit unions offer, this may be the better option for a child’s savings account. Credit Unions also serve as the better option because the parents must be with the children if they want to withdraw money.

As an alternative to getting an allowance, teens may want to consider other ways to make money. Some of these options may include babysitting, lawn mowing, selling baked goods, shoveling snow, flyer distribution, selling Avon products, or summer positions with organizations like YouthWorks.

A big help to ensure that children will save money is for parents to be role models to their children. Parents may want to sit down with their kids and discuss with them the benefits of saving. For example, statistics on how much quicker a person can buy a house based off the money they save or being able to travel out of the country. Also, taking a financial fitness course with your teenage child could be a big help. This financial fitness class will teach your kids how to manage money while still living on a budget, most importantly the class is free of charge.

Regardless of how old one is, financial fitness will always be an important factor. The earlier children understand this, the better off they will be in the long run. For more information about Financial Fitness courses, please contact Neighborhood Housing Services of Baltimore.

BE TAXWISE!

By: Operations Department, NHS of Baltimore

As a new year begins, this is the time to begin thinking of how to be financially savvy and save for your rainy day. Knowing the Ins and Outs to building assets for your family’s future - even your own - is critical during these rough times. As such, participate in a financial fitness workshop to find new and innovative ways to shop, save and invest. But while thinking about your future, stop by our office to get your taxes prepared and to receive information about literacy workshops. At our site, we will offer clients (those making below $49,000) the opportunity to open savings accounts, purchase savings bonds and receive direct deposit of their refund into their accounts. The service is FREE through the Baltimore CASH Campaign!

Now that the new year has started, its time for families and individuals to pull out those well organized receipts and hoarded papers from 2010. While this may be a cumbersome task, at least you will see a benefit from your madness. For those who are not itemizing this year; your process is plain and simple, just present the W2(s) and Social Security Cards for you and your dependents. For incentives this year, there will be the usual Earned Income Credit, Child Tax Credit and Dependant Care Expense. And, Homeowners who have gone through foreclosure will have the opportunity to write off their debts – to include credit cards. This can only happen if your Lender/Creditor has cancelled your debt to which you would have received a letter or statement showing the amount written off. Another incentive is Energy Efficiency; if you purchased and installed an energy efficient furnace, windows, doors, air conditioning units, etc. you may qualify for a credit this year. You MUST have all receipts to document your purchase and installation.

Where there is good news, there is Bad news. First-time homeowners that received an $8000 credit in 2008; now is the time to begin paying back that money. It can be done in installments over a period of time until paid in full. This is a line item on the tax return this year. Sorry; it was not a gift.

In order to get detailed information regarding any of the items mentioned above please visit the IRS website.

NEWS: Interested in knowing how new tax laws affect your bottom line; click here.

Tax Calculator
The calculator is a tool to help you understand how current tax policy affects real families and what would happen if we changed that policy. With this version, you’ll be able to compare three alternative tax policies to see how different taxpayers would make out in either 2010 or 2011:

• 2010 law with all of the 2001-2003 tax cuts and the 2009 stimulus tax provisions still in place;
• 2011 law with scheduled expiration of the 2001-2003 tax cuts (often called the "Bush tax cuts");
• tax law in the compromise plan agreed to by President Obama and congressional Republicans that would extend the 2001-03 tax cuts through 2012 and make other temporary tax changes.

You can also turn the alternative minimum tax (AMT) "patch" on or off to see how raising the exemption affects whether taxpayers must pay the AMT.

Note: The Tax Calculator estimates the impact of proposed tax policies on typical family status.


See you on January 24th for those that are getting taxes prepared at our site!

Tax Prep Office hours: 10-3p.m. Monday – Friday; 10-1p.m. Saturdays (January 29th – March 5th).

Top 10 Ways To Weatherize Your Homes

By: David Fielder, Rehab Specialist, NHS of Baltimore

1. Install blown-in insulation or fiberglass insulation in your attic. Also, cut foam insulation to fit in between floor joists if the room is over a crawl space. You will need some adhesive to make the foam stick in place. The insulation keeps the warm air in at winter time and the cool air in at summer time.

2. Close up any air leaks with spray foam or caulk. When the forecast is for wind, check doors, windows and around basement walls for air leaks. You may also want to call Baltimore City’s Weatherization program at 443-984-1066 for assistance in sealing air leaks and other energy saving measures. This is a FREE program to income eligible folks.

3. Install weather stripping around doors and windows. You can find many products at the hardware store to take care of air leaks. These products mostly have adhesive backs that you can peel and stick on windows and doors. Another good product is the sheet of plastic that covers your windows. Applying this to your window takes a little patience but when done correctly no one will know it is there.

4. Wrap hot & cold water pipes with foam insulation & install a hot water tank blanket. The insulation prevents the hot water pipes from losing heat and will keep the cold water pipes from freezing. The hot water tank blanket will prevent the tank from losing heat.

5. Install programmable thermostat. Decrease the thermostat 2 degrees in winter and increase 2 degrees in summer. This will save a few dollars each month that will add up over the year.

6. Have your furnace checked and cleaned each year. Most energy providers provide a maintenance service to customers. If you have a boiler, you should drain water once a week. This keeps the boiler clean and free from rust which shortens the life span of the boiler.

7. If you have a forced air furnace with duct work, insulate the ductwork. The U.S Department of Energy reports that a heating system can lose 60% of the heated air before reaching the vents in your rooms. If you have old ductwork, having the system cleaned will help your indoor air quality.

8. Clean the gutters from leaves and debris. Make sure the water is flowing from the gutter to the downspout an out. In cold weather ice dams can build up at the gutter. Melting ice water has no place to go but in to your house and down your walls. Keeping gutters clean will prevent this from happening. Water damage walls can be costly to fix.

9. Reverse the direction of ceiling fans. There is a switch on the body of the fan to reverse the direction the fan rotates. When you reverse the direction of the fan, it will push the warm air down. Don’t forget to reverse it in the summer.

10. Make this the season to check you smoke detectors and carbon monoxide detectors. Baltimore City has had several large fires recently. This should be enough incentive to make sure all detectors are working and have fresh batteries. Better yet, have a certified electrician install hard-wired detectors in your house one per floor. You will not have to check batteries again.

Is Buying a Home One of Your New Year's Resolutions?

By: Raevyn Jones, Marketing Coordinator, NHS of Baltimore

Due to the fact that many homebuyers look to purchase in the summer months, there can be many advantages to purchasing at the end of the year. During this time you can take advantage of motivated sellers trying to meet a quota before the end of the year, also you will have readily available moving help because movers are not typically busy during this time.

If you close on your new home by December 31st, you can deduct your equity costs and property taxes on your income tax return. Because you are bound to pay a lot of interest at the beginning of the year, this can save you a lot of money. As the year comes to a close, most builders and realtors off excellent incentives to buyers so that they can sell as many houses as possible. Buyers should definitely take advantage of these types of offers.

Another benefit to home shopping at the end of the year is that many current homeowners sell their homes around this time in an effort to get a tax deduction that will help them purchase a newer home. This is where the prospective homebuyer has to put their negotiation skills into play. Because these current homeowners are so eager to sell their homes, you may be able to get them to go down on the asking price. If you feel that it is risky to handle the deal on your own, you should consult with a HUD certified homeownership advisor or a real estate professional.

If you are seriously considering purchasing a home before the year ends, it is important that you don’t wait until the last minute to start looking into your options. If you wait too late, your choices will be very limited. You should begin looking around September to give yourself enough time to find the right home. Also during the month of September, you should consider attending Live Baltimore’s Homebuying Fair. If you are looking to move into the Baltimore City area, this program offers tours and great incentives.

Regardless of when you plan on buying a home, you should always make room to take a homebuyer education course and get counseling from a HUD certified homeownership advisor. This will make your process a lot less stressful, and will be beneficial in the long run as well.

Keep Your Finances In Shape This Holiday Season

By: Raevyn Jones, Marketing Coordinator, NHS of Baltimore

When it comes to holidays many of us sometimes get above ourselves with gift-giving and it takes a hefty toll on our budgets. Many people have a crazy misconception that its “priceless” to create a picture perfect holiday experience. This thinking will put a strain on your budget and the last thing you want to do is start off a new year with your finances in shambles.

All of the financial troubles that come with the holidays can be avoided if you think with your head and not your heart throughout the process. A significant step is making sure that all of your major bills are paid before you start holiday shopping. Things like rent or mortgage, gas, electric, water, and phone bills should be prioritized over a hefty price tag on a gift you brought. Also things like food and any medication you may need should also be kept in mind.

One major “no-no” when it comes to the holidays is spending important bill money because you are depending on a monetary gift that you think you are not guaranteed to get. The first rule of being financially fit is to be smart with your money.

There are some extra things that we use in our day-to-day lives that we may be able to part with for a month. These things include cable, high speed internet, dining out, and monthly memberships and subscriptions. With innovations like Netflix and smartphones, a month without cable and desktop internet is not so bad.

Another way to save money during the holiday season is to make an agreement with friends and family to exchange gifts after Christmas. This may take away some excitement, but the huge savings will be helpful to your pockets.

Most of all we need to all keep in mind that the important thing about the holidays is to create memories that will last a lifetime, not who is giving the best gift. It should not be hard for anyone to understand that we have all been affected in some way by the economy.

With that said,

Happy Holidays to you and your family from NHS of Baltimore!

Being Prepared When "Life Comes At You Fast..."

By: Jacqueline Wilson, Loan Processor, NHS of Baltimore

State Farm insurance company has a commercial that depicts mayhem coming upon a person with a slogan “life comes at you fast.” When we see this commercial we can relate because we all have experienced unexpected mishaps from time to time. We try to have “rainy day funds" but we all know that these are very hard economic times and the amounts put away for the rainy day funds seem to get smaller and smaller. As a result, the extra funds to resolve these emergencies and continue to function are not available.

Such mishaps as when the car gets towed and you need it right away to get to work, or the car dies never to be revived and a down payment is needed to purchase a new one. Perhaps you receive a large utility bill or some other unexpected event occurs, there are no savings and the regular bills have to get paid, there is no extra. These are the unexpected occurrences that cause people to consider payday loans as a way out because “life indeed does come at you fast”.

In the past, the payday loan companies went unnoticed and this industry really grew. Nationwide there are 25,000 of these companies ranging from small mom and pop shops to large chains. In Missouri alone there are about 1500 payday loan stores and many of the loans have an 422% APR. Check into Cash in Cleveland Tennessee has an APR of a massive 459 %. What this means is that the consumer writes a check for $300.00 and actually gets $255.00 in cash, the difference of $45.00 goes to fees, it is reported that some of these loans are flipped as many as 8 times and escalate from $325.00 to as high as $793.00 before it is paid. In California alone (a place that has been hit hard by the recession) consumers borrow 2.5 billion dollars a year from payday loan lenders. In an attempt to curve these practices some credit unions and lenders have begun to offer small dollars loans at annual rates as low as 12%.

Taking into account the numbers stated above, the residents of Baltimore City that utilize payday loan services can really appreciate the Borrow and Save Program which is offered by Neighborhood Housing Services of Baltimore, Inc., The program was originally offered in the East Baltimore region – however, due to high demand the program has now been expanded to accomodate consumers citywide. The program was launched in August 2009 to help borrowers break the perpetual short-term borrowing cycle, establish healthy banking relationships, gain personal money management skills, and learn the benefit of savings and asset building.

The program provides loans between $ 300.00 and $ 1,000.00 with repayment terms of six months to a year at an APR of 7.99%. Borrowers who currently do not have a banking relationship are required to open a bank or credit union account to receive the loan. Borrowers are also expected to take a financial literacy course, this course is offered free of charge by NHS of Baltimore in an effort to educate consumers so that they do not have to resort to loans at all.

For information about the Borrow and Save program, please contact Jacqueline Wilson at 410-327-1200 ext. 117.

Fear of Homeownership

By: Raevyn Jones, Marketing Coordinator, NHS of Baltimore

Despite President Obama’s recent veto to a bill that could speed up foreclosure and Maryland’s new home loan interest rate being at an all-time low of 3.875 percent; many Marylanders are still in fear of becoming a homeowner. With the nations foreclosure rate still growing, I must admit that not a day goes by without me worried about foreclosure affecting me or a family member in the future.

I think most people’s perception of homeownership is that it is very hard to buy a home yet so easy to lose it. In essence, homeownership is perceived as a goal you work so hard for and it can be taken away in an instant. However, this perception could not be further from the truth. Of course there are challenges along the process to homeownership, as there are with every major decision we have to make in our lives.

In most cases of foreclosure, the person has lost their home for reasons that could have easily been avoided. For example, many people looking to own a home fail to receive proper housing counseling at the beginning of the homeownership process. Lack of appropriate knowledge about homeownership that is acquired through housing counseling has caused many people to enter bad mortgages, buy homes they cannot afford, and make crucial mistakes in the loan modification process etc. Also a main factor in foreclosure is people waiting too long to seek help. If you are facing foreclosure, you should seek help before feeling sorry for yourself.

Although homeownership is something you have to work hard for, the goal of sustainable homeownership is not far-fetched. There are an overwhelming amount of programs and incentives that assist with down payment and closing costs. Through the Down Payment and Settlement Expense Loan program, buyers are eligible for $5000 to help with costs. Other homebuying incentives are listed on the Live Baltimore website.

I still have my worries but the knowledge of various counseling, homebuyer education, and foreclosure prevention has eased some of my worries. I believe that if the right steps to homeownership are taken from the beginning, the foreclosure rate would not be as high as it is today. When I am ready to buy my first home, the first thing I will do is make sure I have a homeownership advisor by my side in the process.

So you've decided to buy a home....now what?

By: Julienne Joseph, Homeownership Advisor, NHS of Baltimore

Buying a home is one of the largest investments you will ever make. Once you have made the decision to purchase a home, there are steps that need to be taken. Being informed and prepared for the process alleviates the anxiety and stress of the process.

Step 1: Getting Your Ducks In a Row

Once you have determined that this is the time to buy, start gathering the documentation your lender may need in order to secure your financing.
- Homebuyer Certificate. Enroll and Complete a Homebuyer Education Course. Certification may be required (prior to submitting an offer) in order to receive incentives offered by City or State Organizations.
- Your Last Three Years Tax Returns and w-2's
-Most recent 30 days of pay stubs
- 2 most recent statements for all checking, savings, 401k, IRA and investment accounts

These documents will help your Loan Officer accurately evaluate your ability to repay your mortgage and to determine how much of a sales price you can afford.

Step 2: Contact a Lender

A lender is the professional who will provide you with the products and programs a particular bank offers to suit your particular financing needs. Speaking with a lender in the beginning of the process saves time, gas, and money by letting you know just how much buying power you have before you start your search.

Step 3: Consult A Real Estate Professional

Your real estate professional is a key player in the home buying process. They will help you search for the property you wish to buy and represent you in the negotiations of sales price, closing costs, repairs, etc. After receiving your pre-approval from the lender, a letter is issued and given to the real estate professional of your choice to show them that you have secured financing. A pre-approval tells your real estate agent/realtor how much home you can afford. The letter is essential because it narrows your search so the real estate professional won't waste time searching for homes that are over or under your approval limit. At this phase, you will tell your real estate professional all that you are looking for in a home (i.e. number of bedrooms, bathrooms, square footage, etc.). Based on the criteria you provide, they will search their database of available properties and present the homes that meet your needs. Once selected, you and your agent will set an appointment to actually view the property.

Step 4: Make an Offer

You have found a property that you would like to purchase. You and your agent will now submit a contract to the seller proposing the price you are willing to pay for the property. It is common that upon the submission of the contract to the seller, you will provide an Earnest Money Deposit or an “EMD”. The “EMD” is a sign to the seller that you’re serious about purchasing that home. This deposit is held by the broker of your real estate professional until closing and credited towards your closing costs. If the offer is accepted by the seller, the contract is then deemed “ratified”. “Ratification” means that you are now in a legally binding contract that states that you agree to buy the property from the seller and the seller agrees to sell the property to you.

Step 5: Choose An Attorney or Title Company

The title company will be responsible for preparing the documents on your closing day (i.e. The deed, mortgage note, etc.) If you do not have an attorney your lender or real estate professional can recommend one.

Step 6: Get A Home Inspection

After ratification, you will want to get a home inspection. A home inspection will inform you of any repairs that need to be made to the property. It's always wise to get an inspection to ensure that you are aware of the condition of the property.

Step 7: Order an Appraisal

An appraisal will always be ordered by your lender. The appraisal is ordered on your behalf in the name of the bank to make sure that the collateral (the property in this case) is worth what the contract has stated.
*Rule of thumb*. Hold off on ordering the appraisal until you receive the home inspection report. Doing so will avoid you having to pay for an appraisal on a property that you may determine is too damaged to purchase. If the appraiser comes out, before or during your home inspection, you may be responsible for covering the cost of the appraisal even if you choose not to buy the property.

Step 8: Perform the Final Walk-Thru

The inspections are done and your financing is secure. The day of (or the day prior) to closing, you and your agent will take a final look at your property to ensure that it is in satisfactory condition. Once the final walk-thru is done, you are ready to close.

Step 9: Prepare to Close

The title company or attorney has completed your closing package and the final figures are generated. Your attorney will provide you with the amount you will need to bring to closing.

Step 10: Receive Your Keys

All of the documents are signed and you are now a proud homeowner. The real estate agent or attorney will be in possession of your keys until the signing is completed. At that point, they will present you with your keys and the home is now yours!