Why you need to shop around for a mortgage

Interest rates are at a record low, but many borrowers are still reluctant to shop for the best mortgage loan – a decision that could cost them money.

Looking at data from the November 2012 National Housing Survey, Fannie Mae researchers found that close to half of lower-income mortgage borrowers said they did not obtain more than one quote when signing up for their current mortgage.

Comparatively, three out of four higher-income respondents explored competitive offers and said better deals would definitely have an influence on their decisions.

“Although a home purchase is the largest financial obligation most people will ever make, many borrowers do not fully understand their mortgage products and costs,” said Fannie Mae chief economist Doug Duncan. “As a result, some homeowners in this position may find themselves with unsustainable payments down the road.”

Fannie Mae reported that failing to shop around for a mortgage can end up costing borrowers $1,000 or more in closing costs.

As a housing counselor, it’s my job to educate people on the importance of comparative shopping. I encourage clients to attend first-time homebuyers’ workshops as well as one-on-one pre-purchase and post-purchase counseling.

Education is the best way to avoid paying too much for a mortgage. Want to know more? Get in touch with me.

By David Stolt, Home Ownership Services Manager

How to get the most out of your tax refund

 

A recent survey by TD Ameritrade finds nearly half of people expecting a tax refund said they plan to save the money, while 44% intend to pay debt. However, researchers found people tend to spend more of their refund than they anticipate, which means they don’t save as much as they want to, or don’t pay off as much debt as they need to.

Here are some smart ways to use your tax refund to boost your financial health.

Pay off high-interest rate debt, like credit cards

The average credit card interest rate is 15%, and for those with bad credit, it’s close to 24%. The average American household carries $15,000 in credit card debt. Pay down your credit card debt now to save yourself money in interest payments in the future.

Establish or rebuild your emergency fund

It is recommended that you have at least three to six months’ worth of living expenses in savings should you lose your job, get sick or face another challenge that makes it hard or impossible for you to work. Use your tax refund as a starter for this emergency savings fund or to rebuild your emergency fund if it has been depleted.

Set up an Individual Development Account

Individual Development Accounts (IDAs) are matched savings accounts designed to help people with limited income and wealth to save money to buy a home, start a business or get more education. The program provides a match to the funds deposited by the individual. It’s a great idea to use your tax return to start an IDA and start building your assets.

Community Financial Literacy partners with CEI to provide IDAs for immigrants and refugees. CEI also provides IDAs for non-immigrants. Contact CEI or CFL to learn more. A number of organizations in Maine also provide a similar account called Family Development Accounts.

Save for retirement and get a tax credit in return

Have you heard of the “saver’s tax credit”? It’s a federal tax credit that’s available to low- and moderate-income people who make contributions to a 401(k) plan or IRA. The size of the tax credit you are eligible for depends on your income level and how you file your taxes (see the table below).

The credit is applied to contributions of up to $2,000 per person, and the maximum credit amount is $1,000 for individuals and $2,000 for married couples. So, a single filer who makes $25,000 and contributes $2,000 to a 401(k) or IRA will receive a $1,000 tax credit. In addition, the $2,000 contribution will reduce the filer’s tax liability, which saves even more. Deposit your tax refund into a retirement savings plan this year and you will have a tax credit to look forward to next year.

Your employer might also provide a match funds for 401(k) contributions, which is another reason to start saving for retirement today.

Income Range
CreditSingle FilersHead of HouseholdMarried Filing Jointly
50% of contribution$0-$17,750$0-$26,625$0-$35,500
20% of contribution$17,751-$19,250$26,626-$28,875$35,501-$38,500
10% of contribution$19,251-$29,500$28,876-$44,250$38,501-$59,000
No credit availableAbove $29,500Above $44,250Above $59,000

Invest in your home, or save for one

If you own a home, consider using your tax refund to make improvements which may increase your home’s value. A good place to start is to fix any structural issues (like a leaky roof) or mechanical systems. Energy-efficiency upgrades, like replacing leaky windows or adding insulation, not only improve your home’s value but save money in energy costs. You can also pay down the principal balance of your mortgage, which will reduce the amount of interest you will pay over the life of the loan.

If you don’t own a home and are thinking about buying one, use your refund to begin saving for a down payment. Do you have questions about whether home buying is for you, or do you want to learn more about the process? Sign up for one of our homebuyer education classes.

It may seem like a tax refund is free money begging to be spent on a splurge, but if you use your refund wisely, you’ll set yourself up for future financial success.

By David Stolt, Home Ownership Services Manager

How housing and education go hand-in-hand

AmeriCorps Week

In honor of AmeriCorps Week, I’m sharing the words of Kemper Tell, a State and National AmeriCorps member who’s been working with Avesta since September to launch a number of programs for children in several of our properties, with a focus on children of immigrant families. As Kemper explains, education is a vital component of creating a safe, stable home.

Collaboration to Meet Needs

By Kemper Tell

Kemper is serving with Goodwill’s Multilingual Leadership Corps, an AmeriCorps program funded by the Corporation for National and Community Service through the Maine Commission for Community Service. A version of this blog post originally appeared on the Volunteer Maine blog, From the Field.

The need for safe and quality housing is a key to academic success for all children. This is especially true for new immigrants to the United States who face more barriers in becoming productive in society. Some barriers are learning a new language, facing a new culture, and activities as simple as knowing how to shop in a grocery store. As a State and National AmeriCorps member, I am serving with the affordable housing nonprofit Avesta Housing in Portland that is addressing both of these needs by combining quality housing and academic resources.

At Avesta, I am creating and executing an after-school program at several properties throughout Portland and Westbrook. I am providing homework assistance and constructive play for residents, many of whom are immigrants who came to the United States because of various conflicts around the world.

 

The accessibility of having academic assistance located where students live allows for many children to participate in outside-of-school-time activities they would not be able to access if they were located elsewhere. It also creates a greater sense of community for the residents when they have a common meeting space every week where they know they can get homework help and play.

As humans, we all require basic needs to be met in order to be successful, and one is shelter. Avesta Housing is working to meet that need, and in partnership with AmeriCorps, working to create a successful academic environment for its residents.

Kemper has other programs in the works, including an art program and a summer camp program focused on arts and sciences. We’re excited to have her as part of our team!

By Mindy Woerter, Communications Manager

 

Bipartisan report suggests creative approaches to addressing nation’s housing problems

On Feb. 25, the Bipartisan Policy Center’s Housing Commission released its recommendations for changes to national housing policy in a report entitled, “Housing America’s Future: New Directions for National Policy.” It is a comprehensive report that covers a lot of ground – from reforming the housing finance system and improving rural housing, to allowing more seniors to age in place and expanding the availability of affordable housing to people in need.

The report is a culmination of 16 months of research by the commission, which was first established in October 2011 to set a new direction for federal housing policy. The co-chairs are Maine’s own former U.S. Senator George Mitchell, former U.S. Sen. Mel Martinez (R-FL), former HUD Secretary Henry Cisneros, and former U.S. Sen. Christopher Bond (R-MO).

To provide the framework for their efforts, the commission organized a series of forums with housing professionals and practitioners around the country, including one last summer in Mount Desert Island. Avesta Housing, the Maine Affordable Housing Coalition, and other groups provided local support for the forum and offered testimony to the members of the commission. Much of that testimony focused on the dire shortage of housing options for extremely low-income families in Maine.

To address that problem, the commission recommends that our nation transition to a system in which all households with incomes at or below 30% of the area median income are assured access to rental assistance. As it stands now, most of these vulnerable families must wait years to receive a housing voucher, often while living in unhealthy or dangerous conditions.

Other key recommendations for addressing the affordable housing crisis include:

Expanding the Low Income Housing Tax Credit program by 50% over current funding levels, to build up to 400,000 more quality housing units over a 10-year period

Addressing the capital backlog in public housing to improve quality and energy efficiency

Providing short-term emergency assistance to low-income renters (30%-80% of area median income) who suffer temporary setbacks, to ensure stability and prevent homelessness

While much work will be needed to turn these recommendations into reality, there is no question that they represent a thoughtful and important analysis of our country’s most pressing housing problems and how they can be better addressed.

But one of the most lasting legacies of the report may be the support it offers to reforming the way our country’s tax code treats the homeownership and rental housing sectors. Specifically, the report states, “the commission recommends consideration of further modifications to federal tax incentives for homeownership to allow for an increase in the level of support provided to affordable rental housing…. A portion of any revenue generated in changes in tax subsidies for homeownership should be devoted to expanding support for rental housing programs for low-income populations in need of affordable housing.”

Such a reform of America’s tax code represents perhaps our greatest opportunity for ending homelessness and addressing America’s worst-case housing needs. Lowering the cap on the amount of mortgage for which interest can be deducted — from $1,000,000 to $500,000 — and converting the tax deduction to a 15% non-refundable tax credit would assist 16 million more low- and moderate-income homeowners who do not currently benefit from the mortgage interest deduction. It would also save $200 billion over 10 years — money that could be used to end homelessness and provide rental assistance to those with the greatest rental housing needs.

The engagement on such a critical tax fairness issue by the moderate, well-respected voices at the Bipartisan Policy Center comes at a particularly important time, as members of Congress prepare to file legislation that would affect precisely the kind of change to the tax code that the report recommends.

Stay tuned for more on this topic in the coming weeks.


By Greg Payne, Development Officer/Coordinator, Maine Affordable Housing Coalition

Community gives back to Five Graham Street resident

Robert Desjardins is known throughout Biddeford as the city’s number one sports fan, and when you step into his apartment at Avesta’s Five Graham Street community, it’s easy to see why.

His walls are adorned with photos of Biddeford sports teams, some signed by the players, and snapshots of him posing with coaches and athletes. An orange-and-black blanket — Biddeford’s colors — is draped over his couch, next to a seat cushion that screams, “Biddeford Tigers, GO!”

When I visited him recently, even Desi — as he’s known around town — was wearing an orange T-shirt as he pointed out his Biddeford sports keepsakes: a varsity letter framed on his wall, decorated with pins for each sport and a sign proclaiming “#1 Fan”; a collection of more than 100 scrapbooks stacked in his closet filled with newspaper clippings of game write-ups and honor roll mentions, dating back to 1966. I heard about Desi’s story from our maintenance technician, Richard Hodgdon, whose work allows him to get to know our residents well.

Desi, who’s 70, played basketball and ran cross country for Biddeford High School. He’s lived in Biddeford all his life, and at Five Graham Street for six years. He goes to as many home games as he can, no matter the sport, boys or girls. His connection to the community, the athletes and their parents, runs deep.

“I’ve always known the people here,” he says. “The kids are great, the parents are great too.”

The feeling is mutual among the parents of Biddeford athletes.

“The community just adores him,” says Julie Maloy, who first met Desi a decade ago when her son was in Little League. “He gives so much by just his love for our kids.”

Now the community is giving back to him. In November, Desi underwent a five-bypass heart surgery and spent more than three weeks recovering. While he was in rehab, Julie and other parents took the opportunity to do something special for him. The group bought Desi new living room and bedroom furniture, dishes, microwave, and televisions — one for the living room, one for the bedroom. Julie says as many as 100 people volunteered or gave money. The athletes made Get Well signs that now hang in Desi’s apartment.

“I was pretty surprised, pretty touched,” says Desi. “Those parents are amazing, they really are.”

While Desi is still getting back his strength, the parents take turns cleaning his apartment on weekends, taking him shopping or to appointments, and making him meals. The weekly meal schedule started Dec. 3 and already extends through May, with no family repeating a week.

And, of course, no one goes to a sporting event without picking up Desi first. And Desi says he’ll be in the stands no matter what.

“I try to be positive even if things aren’t going well,” he says. “You’re not always going to win. I’ve been there when they win the state championships and there when they haven’t won a game.”

By Mindy Woerter, Communications Manager

Seniors enjoy a chance to eat and socialize at Community Cafe

The residents of Park Street School, a community for seniors in Kennebunk, admit to being a social bunch. They hold daily card games in the building’s large community space and convene regular cribbage games.

Starting in January, Park Street School also began hosting monthly Community Cafes, a program of Southern Maine Agency on Aging that provides people ages 60 and over a regular chance to meet, talk and enjoy a healthy lunch. The program is offered in Kennebunk the first Friday of every month and is open to all seniors in the area.

In February, about 35 people filled the tables decorated for Valentine’s Day to enjoy a meal of meatloaf, vegetables, rolls and Boston cream pie. Guests chatted about their families, books they’ve read and their favorite restaurants in Kennebunk. Guests that day included a woman who worked as a secretary at the school for seven years and was excited to be back in the building. Park Street School resident Joan entertained the group with songs by Patsy Cline and Neil Diamond.

Ann MacAusland, an assessor specialist for SMAA, runs the program but relies on the help of volunteer Park Street School residents like Barbara, herself a recipient of SMAA’s Meal on Wheels program. “I couldn’t help in the kitchen or set up” because she uses a wheelchair, she said, “but I could be at the door helping people fill out paperwork.” Barbara and neighbor Jackie signed up new cafe-goers, handed out raffle tickets and took the $5 donation from each attendee.

Before moving to Park Street School last fall, Barbara was living with her son in Arundel. “Since I’ve moved in here, I’ve met so many beautiful people,” she said.

And the food? “Oh gosh, it’s delicious.”

Avesta staff also help set up for the event and serve food. “It’s a good event,” said Resident Service Coordinator Angie Littlefield. “People seem to really enjoy it.”

The next cafe happens Friday, March 1, and rumor has it the menu is shrimp scampi. Contact SMAA at 1-800-400-6325 for more information.

Our Unity Gardens community in Windham also hosts meals for seniors on Mondays, Tuesdays, Thursdays and Fridays, with catered meals the second Thursday of the month.

By Mindy Woerter, Communications Manager

Free tax preparation services for families who need them

As we’ve done in the past, Avesta is spreading the word about free tax preparation services available for households who need them. Families are fortunate that there are so many ways to get free tax help instead of paying someone to file your taxes, or, worse, getting a refund anticipation loan that carries excessive fees and ridiculous interest.money jar

We’re partnering with Gorham Savings Bank and the United Way to sponsor a week of free tax preparation events beginning today. IRS-certified tax preparers will be on hand to help you prepare and file your taxes, check your credit report, and apply for Maine’s property tax and rent refund programs. The events are February 26-28 from 5-8 p.m. and Saturday, March 2, from 9 a.m.-2 p.m., happening at United Way’s office at 1 Canal Plaza, third floor. They’re available to people who made less than $51,000 in 2012.

If you can’t make it to an event, you can stop by our new HomeOwnership Center any time during tax season. Contact me to find out more or make an appointment. The United Way is also open to help, so give them a call at 874-1000.

If you’d rather take care of your taxes from your living room, and you made less than $57,000 in 2012, you can go to myfreetaxes.com/Maine and file both their state and federal taxes for free. The online software is easy to use and features a toll-free number to call if you have questions.

Taking advantage of these free services will save you up to $200 in fees you’d pay elsewhere for tax preparation, and we’ll help you apply for the Earned Income Tax Credit, which could give you up to $5,891.

Visit cashgp.org for more information.

And check out this space in a couple weeks for smart ways to spend your tax refund. Hint: playing the slots at Oxford Casino is not on the list.

By David Stolt, Home Ownership Services Manager

Shining a light on affordable housing

A welcome mat

Welcome to The Porch Light, Avesta Housing’s blog. We hope to use this blog as a platform to share information about our work, the industry we work in and the people we serve.

Avesta has been around for more than 40 years and seen lots of change in affordable housing. In the 1970s, we were developing garden-style housing on acres of land in pastoral settings. These days, we’re rehabbing historic school buildings and turning empty urban lots into energy-efficient housing. This progression is evident as you peruse our wall of photos in our Portland office.

This shift reflects changing Maine’s demographic and their needs. More people are moving to urban areas, where they can access public transportation, public services and other amenities. Living where the jobs are is crucial for households that are seeing expenses like gas and food eat up a greater chunk of their monthly budgets.

What hasn’t changed, however, is the need for what we provide. In fact, the need is greater than ever. In Maine, the hourly wage needed to afford a two-bedroom apartment at fair-market rent is $15.10, but the mean hourly wage among renters is just $9.82. That means thousands of Maine households are struggling to find affordable housing or are paying more than 50% of their income on housing. Our waiting list for affordable apartments is 2,200 people long, but in 2013 we anticipate having just 400 openings.

Meanwhile, budget uncertainties at both the state and national level imperil the programs and services that help low-income people find safe, affordable places to live.

As the economic and political landscapes change, we wanted to find new ways to talk about what we do and, more importantly, why we do it. This blog is one of those ways.

Why The Porch Light?

The name to us evokes that warm, safe feeling of home – a porch light left on to greet you and to welcome your neighbors. It’s a simple comfort, but one that’s impossible to take for granted if you’ve ever wondered where you might sleep that night. We’ll use this space to shine a light (it’s also a metaphor!) on the importance of housing security and the people impacted by it.

To make sure you don’t miss anything, subscribe to updates either via your email or an RSS reader on the right. And also check us out on Twitter, Facebook and LinkedIn.

By Mindy Woerter, Communications Manager