Allstate Foundation Purple Purse Moving Ahead Curriculum A Financial Empowerment Resource

Curriculum Overview Understanding Financial Abuse- Keeping Safe and Starting Over MODULE 1 Learning Financial Fundamentals MODULE 2 Mastering Credit Basics-Reviewing, Understanding and Improving Your Credit MODULE 3 Building Financial Foundations-Homes, Loans and Automobiles MODULE 4 Creating Budgeting Strategies-Saving and Investing, Insurance and Education MODULE 5

Building Financial Foundations Allstate Foundation Purple Purse Moving Ahead Curriculum MODULE 4 Building Financial Foundations Homes, Loans and Automobiles

Building Financial Foundations MODULE 4 Building Financial Foundations Homes, Loans and Automobiles Objectives: Financial Paperwork Loan Options Home Options Home Ownership Mortgage Application Process

Module 4: Opening Exercise Have you ever applied for a loan? On a scale of 1 – 10, how comfortable are you with the loan application process? Do you feel knowledgeable about how loans work? Would you feel comfortable negotiating terms of a loan?

Purple Purse Moving Ahead Curriculum MODULE 4 Financial Paperwork

Organizing & Keeping Documents Module 4: Financial Paperwork Organizing & Keeping Documents Financial Records – bank statements; CD records; credit card agreement; money order receipts; loan documents; documentation related to public assistance Legal Documents – birth certificate; marriage license; divorce decree; social security card/s; will; immigration paperwork; protection order Property Documents – titles or deeds, rental or lease agreement; vehicle registration; insurance policies; photos of valuables Health Records – medical, dental, vision records; health, life and disability insurance policies; medical expense receipts; list of doctors; living will Expense Documents – household bills; monthly statements; receipts Organizing and keeping these documents will help prepare you for any future loans or large purchases as well as help you build or re-build your financial life. Don’t worry if you don’t have them all but it might be a good idea to work on tracking them down if they exist. Consider getting an accordion file/folder and separate the sections in these categories.

Purple Purse Moving Ahead Curriculum MODULE 4 Loan Options

Unsecured Loan Module 4: Loan Options Obtained without collateral Also called a ‘signature loan’ Typically has higher interest rates than secured loans Examples I.O.U. – signed agreement, typically between friends or family Credit card loan

Secured Loan Module 4: Loan Options Protect by an asset or collateral Often the item being purchased IS the collateral Due to the collateral, interest rates are typically lower than an unsecured loan Examples Auto Loan Home Loan or Mortgage Debt Consolidation Loan

Things to Consider When Buying a Car Module 4: Loan Options Things to Consider When Buying a Car New car loans tend to have lower interest rate, but may be harder to qualify for Don’t be afraid to loan shop for the best rates; don’t assume what the dealership offers you is the best deal for you As a general rule, loans with shorter terms are better because you will pay less in interest over the life of the loan Visit www.edmonds.com to help calculate the car loan amount you can afford

Example of Interest vs. Term Module 4: Loan Options Example of Interest vs. Term Loan Amount Term (Months) Interest Rate Monthly Payment Total Interest Paid $15,000 36 3.24% $437.81 $761 48 3.39% $334.61 $1,061 60 3.49% $272.81 $1,369 72 3.74% $232.90 $1,769 Typically, the shorter the terms, the lower the interest rate.

Before Signing Module 4: Loan Options Pre-Payment Penalties – monetary penalties should a borrower payoff the loan earlier than was originally agreed upon You may be able to negotiate it to be removed before you sign Predatory Lending – the practice of using unfair, deceptive and abusive tactics in lending If you feel you have been a victim of predatory lending or you want to research a potential lender, go to www.usa.gov/consumer for state-specific consumer protection information Read the small print and don’t be afraid to negotiate off or reduced fees.

Purple Purse Moving Ahead Curriculum MODULE 4 Home Options

Housing Considerations Module 4: Home Options Housing Considerations Transitional House (TH) Program might be an option for someone who is leaving emergency shelter, but not available in all areas Section 8 Program makes privately-owned, rental-housing, affordable to low-income renters Before you rent, determine how much you can afford; it’s recommended that your rent should not exceed 25% - 30% of your income If you currently rent or lease with your partner, you may ask for a ‘lease bifurcation, which allows for the removal of you or your partner’s name from the lease

Before Signing a Lease Module 4: Home Options Do not put money down unless you’re sure you want the unit Calculate ALL anticipated costs of the unit (gas, electricity, parking, etc.) when determining whether you can afford it Review the agreement to make sure the landlord has a responsibility to respond to emergencies, including a point-of-contact and time frame for response

Purple Purse Moving Ahead Curriculum MODULE 4 Home Ownership

Before Buying Consider: Module 4: Home Ownership Before Buying Consider: Do you have a budget and do you stick to it? Do you have a good credit history and score? Do you have steady income and a stable job? Do you plan to stay in the property for at least 3-5 years? Do you have savings for a down payment and closing costs? If yes, get pre-qualified with a lender – this will tell you how much the bank is willing to lend you and allows you to be competitive with other buyers If the answer is no, you can set these as goals going forward.

Mortgage Loan Overview

Mortgage Application Process Purple Purse Moving Ahead Curriculum MODULE 4 Mortgage Application Process

For Buying Consider: Module 4: Mortgage Application Process Employment History – most lenders look for at least two consecutive years of employment within the same industry Credit History – lenders look for a history of on-time payments; you must demonstrate that you can manage credit responsibly Outstanding Liabilities – your total monthly payments for debts should not exceed 42% of your monthly earnings Cash and Asset Reserves – lenders may request information about your available cash (checking & savings)

Building Financial Foundations MODULE 4 Building Financial Foundations Homes, Loans and Automobiles Check In Questions: Do you have more questions regarding types of loans, etc. and do you know where you can go to have these answered? What do you think is the most important aspect to this Module?

Building Financial Foundations Allstate Foundation Purple Purse Moving Ahead Curriculum MODULE 4 Building Financial Foundations Homes, Loans and Automobiles