HDF 322 Midterm Outline of Last Lecture I Housing Alternatives Outline of Current Lecture II Importance of Law in Family Finance A Property Ownership in Texas a Community Property vs Separate Property III Premarital Agreements a Common Law Marriage IV Texas Homestead Law V Home Equity Loans a Pros vs Cons b Home Equity Loan Features c Calculate Maximum Loan VI Importance of a Will a Types of Wills b Texas Will Die Intestate for Single Person Community Property and Separate Property VII The Financial Planning Process a Personal Financial Planning b Advantages VIII 6 Step Process IX Developing Personal Finance Goals X Goal Setting Guidelines SMART XI Life Situation and Personal Values a Economic Factors b Global Influences c Economic Conditions XII Personal Opportunity Costs XIII Financial Opportunity Costs XIV Time Value of Money a Future Value of a Single Amount b Future Value of a Series of Deposits c Present Value of a Single Value d Present Value of a Series of Deposits XV Different Types of Annuities These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute XVI Planning for Successful Money Management a Opportunity Costs XVII A System for Personal Financial Records XVIII Record Keeping a Items in your home b Items in safe deposit box c Personal computer records XIX Personal Financial Statements Measure Financial Progress XX Balance Sheet XXI The Cash Flow Statement XXII Evaluating Liquidity XXIII Savings Adequacy XXIV Evaluating Tax Burden XXV Budgeting Spending Plans a Steps in Budgeting Process XXVI Successful Budgeting Traits XXVII What is A Financial Plan XXVIII Selecting a Budgeting System XXIX When To Keep Track XXX People Fight Defusing Money Issues XXXI Personal Characteristics XXXII Developing Money Sense In Children XXXIII Leasing XXXIV Ready to Move In XXXV Repairs Remedies XXXVI Security Deposit XXXVII Roommate Problems XXXVIII Evictions XXXIX Housing Alternatives XL Opportunity Costs of Housing Choices XLI Renting Residence a Advantages Disadvantages XLII Home Ownership XLIII Home Equity Wealth XLIV Frank Dodd Law XLV Steps of Home Buying XLVI Home Ownership Costs XLVII Front End Costs XLVIII Discount Points XLIX Break Even L Loan Qualification LI The Mortgage Debt Service Ratio and The Debt Service Ratio LII Factors to Consider The House Hunt LIII The Purchase Agreement LIV Applying for Mortgage Loan LV Closing Ritual Closing Ceremony LVI Closing Costs LVII Down Payments Current Lecture trying to show possible impact fam law can have on personal finance when its good no problem when its not so good then past decisions will cause multiple problems Property Ownership in Texas Community Property these 3 things are in definition of constitution of community property o EQUAL 50 50 o UNDIVIDED problem word bc when bad times come you cannot divide community property cant say ill take left and you can have right of house o 11 community property states LA TX Mexico AZ CA Utah Idaho Washington St Wisconsin point SOUTHWEST flavor in community property it is a Spanish heritage we had and adapted to property ownership as Spain does when you leave one state and go to another you still take 50 50 undivided but property in new state will go by that law when you live in TX you go under community property Separate Property you can have certain ways to acquire separate property So if interested in keeping separate prop sep should be put in separate account not reinvested not in a joint account Community Debt If you bring it into marriage you can use community property to pay it off Premarital Agreements o A couple got married in 80s lived in Burnet o When divorced had prenup that was Supreme Court s first case o Found in favor of him he got all the stuff and she got beat up pick up bc her business went back o But it was a prenup that held up in court o child support and retirement cant be in prenup Example of Prenup wanting to keep things separate Own attorney don t hide assets get assistance if needed might nt be same as a will separate debts and comm debts go together What s Mine is not Yours prenups of rich and famous Perry wife had the money Don Trump had prenup with one More examples these all go into keeping prop the way you want it Common Law Marriage we are 1 of 16 that have common law marriage TX has 3 things Home Equity Loans o we moved in with other states o HOME EQUITY LOAN you have so much in your payments we will let you borrow but nothing else but puts home at risk bc if you don t pay bills they can take your home o taking a HOME EQUITY LOAN has lower interest rate than car credit card o interest is deductable Pros and Cons o reverse mortgages can assist you in if you wanted to do this instead of making payment you own home and someone makes payment to you bc they get house when you die or in 10 yrs they do o bad thing if you don t pay they take it Home Equity Loan Features good features has to be voluntary have to want to do it only have 2 weeks to process loan in an office will take 2 weeks to get it can think only one at a time even if you don t take out max can only have 1 have to have 1 year between borrow up to 80 minus debt is MAX you can get Calculate Max Loan have to do this on EXAM 1 Find market value current selling price can go to realtors appraiser comparable homes in area 2 Take 80 of market value multiply by 80 3 Then you subtract any outstanding debt THAT IS MAX LOAN AMOUNT YOU CAN BORROW Importance of a Will EX Famous case that used this law Connelly there when Kennedy was killed became ambassador and treasurer good political career got gifts all over the world wife and him settled in Austin in 80s had to declare bankrupcy had farm in houston and house in austinkept 200 acres in houston and sold austin sold all their prop and only able to keep 30 000 of personal property Types of Wills 4 types 4th one is most important 1 They are costly to prove bc have to be handwritten and have to prove a lot 2 Oral will death bed will someone other than person who gets money needs to hear itdifficult to prove expensive to prove can take to court 3 2 person will mom and dad get it together joint mutual with death of first person that will can never be changed bc to change the person that dies needs to sign it so you want your own will so if death occurs the other person can modify will as they move through family life cycle 4 big mama dad dies and leaves everything to