The Rising Star

July 2007 - Volume 4, Number 4

News from
the Star

Add Your Will to Your Vacation To-Do List

Yes, that's RJ trying his best to be enthusiastic about turning 15. He has a big year ahead of him. By the time you read this, he’ll be on his way to China for a year of study abroad. He's staying with a family in Shanghai. They sound really excited about having RJ stay with them. The family has a teenage daughter, but no fears. She's coming to the U.S. for the year.

For once I included a picture of Stacy and me, and no, that's not around here. (Yes, the rain looks familiar, but the jackets should have been a clue.) Stacy and I visited Cannon Beach, OR on our way to the National Association of Mortgage Brokers (NAMB) convention in Seattle.

After serving a year on NAMB's Education Committee, Stacy has been asked to chair the Subcommittee on Financial Literacy. Stacy intends to use her position to promote programs to educate Americans how to make responsible choices for their financial futures. Her position also makes her responsible for the association's outreach to high school students through DECA.

During the summer months many families are traveling on vacations. Much time is spent in preparation for such trips. Destinations, travel arrangements, accommodations, expenses, wardrobes are just a few of the things which must be considered in order to have a pleasant and memorable vacation. For many families, one of the last considerations before they board the plane or pile into the car for a cross country trip is that they have yet to take the time to prepare and/or execute a Last Will and Testament.

Every summer I invariably receive last minute requests to prepare wills for couples about to leave on vacation. In most instances, if given enough advance notice, we are able to prepare the wills and have them executed before the vacation begins. However, there are always situations where there is not enough time to meet the last minute requests of these travelers. Many times couples who have found themselves in a crunch for time have asked about preparing handwritten wills. My response has always been that while there is no substitute for a will prepared by an attorney, a handwritten will is most times better than no will at all. While there are pitfalls in a homemade will at least you will have the opportunity to make important decisions such as who is to receive your property and who will be the guardian of your children. Without your input on such decisions your property will pass according to the state laws of Descent and Distribution and a Court will appoint a guardian for your children.

For a handwritten or "holographic" will to be valid it must be wholly in the maker's handwriting. So long as the entire will is in the handwriting of the maker, it does not have to be witnessed or notarized. The handwritten instrument should clearly state that it is your intention to make a will, that you intend to dispose of all of your property, who is to receive such property and, if applicable, who is to serve as the guardian of your surviving children. The will should be signed and dated. While it is not required, it would ease the probate process if you name who is to serve, without bond, as the independent executor to administer your estate. Other than being entirely in the maker's handwriting there is no special form that is required. I have probated a holographic will that was written on the back on an envelope and one that was written of the back of a hospital admittance form. It is also obviously important to make sure that the will is left in a place where it will be easily found.

Again, there is no substitute for a typewritten will prepared by an attorney but, if necessary, do not hesitate to write out your will, enjoy your vacation and be certain to follow up with your attorney upon your return.

You can contact Larry at

(713) 225-9000
larry@jgl-law.com

Lawrence T. Gillaspia is an attorney with the Houston law firm of Jones, Gillaspia & Loyd, L.L.P. He is not board certified, and the information contained in this article is not intended as legal advice. Readers should consult attorneys for advice on their particular circumstances.

Don’t Be the Victim of a Bad Mortgage
Arm Yourself with Tools and Knowledge

If you think getting a mortgage is confusing, you're not alone. Most people don't understand how to shop for a good mortgage. Several recent studies provide some interesting highlights.

  • In a Federal Trade Commission study, mortgage customers were given loan disclosures in use today and asked to identify the mortgage terms. Half the participants couldn’t correctly identify the loan amount, and 90% couldn't figure out the closing costs.

  • A study by Federal Reserve Board economists of homeowners with adjustable rate mortgages found that 41% didn’t know the maximum rate they could face. About 28% didn’t know the index used to determine rate adjustments, and many more gave incorrect answers (such as "the going rate").

  • In a recent study commissioned by Bankrate.com, 34% of respondents could not identify the type of mortgage (fixed rate or adjustable) they had.

    This article kicks off our series on how to shop for a good mortgage, one that fits your financial needs. We hope to provide you with the knowledge and tools to make informed decisions consistent with your life plans. In this series, we will cover:

  • Choosing a lender - Mortgage brokers have received a lot of bad press, but over the last decade, independent brokers have originated up to 68% of home loans. They do that because they offer more options and better rates (according to a Georgetown University study). Rather than the unrepentant cowboys portrayed by the press, brokers in Texas are heavily regulated, more so than any other loan originators.

  • What is YSP? - A recent CNN article warned "yield spread premiums can bite you." The truth is YSP is of little concern to the savvy mortgage consumer who knows how to compare loan options.

  • Understanding the APR - The annual percentage rate (APR) is the effective interest rate of your mortgage that takes into account closing associated costs. Unfortunately, not everyone agrees on the "formula" for calculating the APR.

  • Comparing loan options - The Federal Reserve Board (FRB) suggests consumers use the APR when comparing loan options. That would be great except lenders calculate the APR differently. In addition, the FRB "formula" makes certain assumptions that do not apply to most mortgages.

    Once you have the tools and knowledge to understand your options, you can to make a decision that fits your financial goals. We’ll conclude this kick-off article with some general tips.

  • Don't believe the ads - I heard a TV ad the other day for a $150,000 mortgage with a $500 payment. That's not possible unless the loan has a low "teaser" rate or negative amortization, but I didn't hear that in the ad.

  • Find someone you trust - Your broker should be able to educate you about the mortgage process and should be willing to discuss all available loan options.

  • Do your homework - Learn how to compare loan options. Don't be afraid to shop your mortgage if you don't think you're being treated fairly.

    Please join us next month for another article in this series. If you are considering a mortgage now, by all means call us for a preview.

  • “Your Loan Educator”