Tax time is ideal platform for financial-education outreach

It's the time when residents across the country think about preparing their tax filings -- and that often translates into stress for a lot of people, especially new homebuyers facing the task of itemizing for the first time. For organizations that offer financial education and counseling programs, it's an ideal opportunity to build your community visibility and reach new clients. The op-ed below was issued nationally by NeighborWorks America, but could easily be adapted for placement in local media, newsletters, etc. 

Don't be 'taken' this tax season

By Marietta Rodriguez, vice president of mortgage programs for NeighborWorks America

Marietta Rodriguez

All of the data aren't in yet for 2013, but it's safe to assume that hundreds of thousands of people became first-time homeowners last year. Becoming a homeowner also means that many people for the first time will find it beneficial to itemize their tax returns. The advertisements about using a paid, professional service for completing and filing tax forms are filling the airwaves, newspapers and other media. Most of these advertisements promise friendly and fast service. But few if any of these ads disclose the cost.

According to a study by the National Society of Accountants, the average cost of tax-preparation services in 2012 individuals without itemized deductions was $143 for a 1040 form and an accompanying state tax form. The same survey found that the cost to have a longer, itemized tax return completed -- required by most homeowners -- was $246.

To put those costs in the context of everyday household expenses, $246 is slightly above the average monthly winter utility bill forecast by the U.S. Energy Information Administration.

How to avoid the cost of tax preparation fees

But taxes are complicated, especially for consumers who have never itemized deductions before, which is usually the case for first-time homeowners. So, isn't using a professional tax preparer a good idea?

It is a good idea to seek trained help, especially if it is available at little to no cost. And that kind of help is available for many people, especially those with low- and moderate incomes, whether homeowners or not.

More than dozens of NeighborWorks organizations and their local partners are ready to work with taxpayers on their forms. NeighborWorks organizations and other community-based nonprofits offering tax preparation services typically do so as part of the Internal Revenue Service's Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs. The VITA program is limited to people who make less than $51,000 -- about the median income in the United States -- while the TCE program is limited to filers who are 60 years or older.

In 2012, more than 92,000 people volunteered to help and more than 3.3 million returns were filed by all VITA sites around the country-- all at no cost.

The attraction of 'fast-money' tax services

Many advertisements for tax-prep services also promise fast refunds – a prospect that is particularly alluring to low-income individuals and first-time homebuyers. However, these refund advances or loans should be avoided.

The truth is, refunds from tax returns filed electronically are available  within a week or two, making the fees charged for on-the-spot "advances" of highly questionable value. According to an analysis of 2012 refund programs by the National Consumer Law Center, the average annual interest rate charged for a quick refund loan exceeds 100 percent. No homeowner would be willing to pay such a rate for a mortgage, and there's no reason anyone should pay that kind of  fee just to receive the money they earned.

So collect your W-2 and other financial documents for 2013 and head over to one of the hundreds of locations that offer free tax-prep services.  A list of locations can be found on the IRS website. It's worth it.

Homeownership the NeighborWorks Way: Prepare, Invest and Retain

By Marietta Rodriguez
director, National
Homeownership
Programs & Lending

Every June is National Homeownership Month. While the most recent housing crisis has perhaps put homeownership into question, homeownership provides many benefits to homeowners and to communities. Sufficient preparation when considering homeownership is critical. We like to call the services NeighborWorks provides homeownership the NeighborWorks way.

While homeownership may not be the right choice for every person at every stage of their lives, homeownership is an important cornerstone of our communities. And NeighborWorks America and the NeighborWorks network are trusted resources for homeowners, creating thousands of homeowners each year. In 2012 NeighborWorks America and the NeighborWorks network helped 15,000 homebuyers achieve their dream of homeownership.

For 35 years, NeighborWorks America and the NeighborWorks network have provided access to homeownership and to quality housing in thousands of communities across the country. The more than 240 NeighborWorks organizations across the country provide current and potential homeowners a suite of specialized homeownership programs and services. These include an analysis of homebuyer readiness, comprehensive education on the homebuying process, one-on-one financial coaching, important information about the availability of possible financial assistance with down payment and closing costs, and access to affordable mortgage products.

Preparing for Homeownership with Pre-Purchase Education 

Successful homeownership requires more than just having enough money on hand. It’s about knowing how to navigate the home buying process, what to expect once you become a homeowner, and having a reliable partner to turn to when questions come up. For example, for many homebuyers, pre-purchase homebuyer education and counseling is a critical component to successful and sustainable homeownership.

NeighborWorks organizations, located in every state, are a great place for prospective homeowners to start because they help individuals become mortgage-ready and better equipped to manage the process. Counselors work with individuals to ensure their credit profile reflects strength and help identify experts who could explain what kind of maintenance – immediate or long-term – the home may need.

It is important to remember not all mortgages are created equal. NeighborWorks counselors can help potential homeowners secure a mortgage suitable to their current needs. In addition, NeighborWorks services offer a free or low cost alternative to  higher cost services,  and that’s an important distinction. Ultimately, it’s a NeighborWorks homeownership counselor’s goal to make sure that each homeowner is matched with the right homeownership products. In 2012 NeighborWorks organizations provided nearly 122,000 individuals and families with education and counseling services.

Providing Help through a Network of HomeOwnership Centers

NeighborWorks America’s National Homeownership Programs offer technical assistance and grants to our network that, in turn, provide a continuum of strategies to help ensure successful, sustainable homeownership for people of modest means in every state. There are more than 100 NeighborWorks HomeOwnership Centers around the country, and many offer affordable first and second mortgages. They are “one-stop” shops for prospective homebuyers and homeowners. Customers can access all of the services and training necessary to shop for, purchase, renovate, maintain, and manage a home. To locate a NeighborWorks HomeOwnership Center, visit here.

NeighborWorks America knows that for many individuals the road to homeownership can seem, at times, challenging. But dependable NeighborWorks staff work hard every day to make the dreams of homeownership a reality for thousands of individuals every year. Join us in celebrating those who will achieve their homeownership dreams in 2013 and help us ensure all those interested in pursuing homeownership know about homeownership the NeighborWorks way: prepare, invest and retain!

Is Now the Time to Buy? Homeownership Re-examined

By Marietta Rodriguez
director, National
Homeownership
Programs & Lending

The boom and bust of the housing industry in recent years has fueled doubt about the value of homeownership and caused many to re-examine the long-held belief that homeownership is a viable path to a stable and successful financial future.

In a recent report, our network member, Homewise, makes a strong argument that homeownership is still a smart choice, and that current market conditions offer an unprecedented opportunity for Americans to advance to economic ladder. According to their research, the typical homeowner purchasing a $200,000 home today, will amass nearly $500,000 dollars more than a renter over a 30 year period. Homeownership also provides important non-economic benefits, like stability and security, which are important for personal happiness, child development and family unity.

At NeighborWorks America, we support homeownership as a goal for many families. Homeowners typically stay longer in one location and contribute to lasting neighborhood improvements which support higher property values. Homeownership also builds both confidence and long term wealth for families of all backgrounds. For many low- and moderate-income homeowners, a house is their primary financial investment, which is critical when they need to take out loans for their children’s education or to start businesses.  Currently, interest rates are at historic lows and there is far more affordable inventory on the market, even in high priced markets like Santa Fe, New Mexico, making this an ideal time to buy for those who are ready.

However, for the benefits of homeownership to be fully realized, the purchase must be sustainable and must be a good fit for the personal and financial needs of the buyer. The buyer’s stage of life must also be considered. For example, younger buyers must weigh the financial advantages of homeownership against the risks of needing to quickly relocate to pursue a job opportunity.

To help individuals understand which option is right for them, NeighborWorks America has dedicated substantial resources to training a network of HUD-certified counseling agencies and to establishing a network of NeighborWorks HomeOwnership Centers throughout the country. Every day the NeighborWorks Network members provide people across this country with services ranging from financial education to individualized homeownership counseling in preparation for making an informed homeownership decision. The homeownership counselors help customers decide what next steps are best for them and their long term happiness and prosperity —  sometimes this is a new house and sometimes it is finding an affordable rental or repairing credit.

My hope is that the economic crisis will leave us understanding the importance of a middle ground for homeownership. It is neither a fast track to wealth that some imagined during the boom years nor is it the folly its critics claimed after the foreclosure crisis had begun. Homeownership is an individual choice that when pursued with eyes wide open and focused on personal and financial goals could be the basis of a great future.

To read Homewise’s recent reports on homeownership, click here.

To find a homeownership counselor, visit www.nw.org. 

Will the Foreclosure Crisis be With Us Another Two Years?

By Marietta Rodriguez
Director, National
Homeownership
Programs & Lending

With signs of a turnaround in housing appearing in various industry reports such as those from the National Association of Realtors for pending home sales, and from the National Association of Home Builders via its new home sales index, it’s not difficult to think that the foreclosure crisis is behind us. But it isn’t.

Recently I was on a panel at the National Association of Real Estate Editors spring meeting discussing the housing market alongside representatives from Bank of America and FNC, Inc., and we agreed that the foreclosure crisis won’t end for another two years – according to the most positive forecasts.

Mortgage rates are likely to remain very low for the foreseeable future and that’s good for housing and for ending the foreclosure crisis. However, what we really need to do in order to find the end more quickly is make it easier for qualified buyers to purchase homes and for homeowners in distress to find solutions that don’t end in foreclosure.

Neighborhood Housing Service of
South Florida educates a potential homebuyer

On the purchase side, NeighborWorks America supports efforts to make homeownership as accessible as possible without creating undue risk in the system. We support the availability of low down payment mortgages which enable homebuyers who are already saving to purchase a home more quickly. Additionally, we support underwriting that keep loans within the reach of deserving buyers. Finally, we think that homebuyer education is a critical piece of the process. Education is what prepares people for the true costs of homeownership, and helps them make sustainable choices.

Family outside their home
in Great Falls, Montana

On the foreclosure front, we’ve established partnerships that connect homeowners to the help that they need to find an alternative to foreclosure. For example, by partnering with local governments we are able to direct our efforts into neighborhoods that are at the greatest risk of foreclosures, and making those resident aware of options for assistance. We are also facilitating better homeowner communication with servicers through the HOPE Loan Port, which tracks individual requests for loan modifications. Servicer outreach centers are another key tool for stemming foreclosure, because they allow homebuyers to receive in-person advice on how they might keep their home. However, as I told the audience at the National Association of Real Estate Editors conference, all servicers could do more.

The housing market won’t rebound until the foreclosure crisis is behind us. However, by improving the availability of mortgage credit and homebuyer education, we can minimize the impacts of the crisis and make sure it ends within two years.