Don’t wait until the end of the year to review your finances. Particularly as the open enrollment seasons approach for Medicare and many employee-benefit plans, Fall can be a great time to conduct a mini financial checkup. Plus, if you’re not on track to achieve all your goals for the year, you still have time to adjust your annual budget, change your tax status, or max out that 401(k).
Ask advisors from the National Association of Personal Finance Advisors (NAPFA) your questions about retirement, investing, taxes, insurance, saving for college and more this Thursday, September 20, from 1 p.m. - 3 p.m. ET.
You can ask questions early by clicking "make a comment," and they will be submitted and held for moderation until Thursday.
We hope to see you then!
Hello, I'm Bobbie Munroe CFP. I am a NAPFA registered fee-only financial advisor working in Atlanta, GA and Tallahassee, FL. I look forward to answering your questions today. My thanks to Kiplinger for hosting this worthwhile event.
Thanks, Bobbie. We're also expecting several other participants from NAPFA today for our chat.
And hello from Bedford, Massachusetts. I'm Lea Ann Knight, also a NAPFA registered fee-only financial advisor. I, too look forward to answering your questions today!
We're going to start with a refinancing question from Margaret. If you're just joining us, please feel free to submit your question, too.
My name is Matt Kovalcik. I am a NAPFA-registered fee-only Certified Financial Planner with an office in Upper Arlington, Ohio and Bluffton, SC.
Margaret, how much will it cost you to refi (not the prepaid items that go to escrow but everything else)? What will be the difference in your payment? Do you plan to stay in this home a long time?
Margaret submitted that question ahead of time, so I don't know if she's here for follow up questions like -- what's the term of that mortgage, and how much are you borrowing?
Hi Margaret. I think the old adage generally holds true- if you can reduce your interest rate by a full percentage point or more, it could make sense to refinance. Assuming your fees to pay to refinance are minimal, you can use this opportunity to lower your monthly payment and/or reduce the length of your mortgage.
Well, in general you can divide the costs to refi by the savings per month and that is how many months it will take you to break even. That said, I want to warn people of refi-ing all the way up to retirement age so that they still have 30 years on a mortgage. If you are doing a refi and you are 10 years into the mortgage, get a quote on a 20 year mortgage.
Thanks for joining us, Matt and Lea Ann.
Some of my clients have actually done 15 year mortgages when they refied even if it meant a slightly higher payment. They use the better rates to get the mortgage paid off faster.
A question coming from Ronnie on short sales (on which I believe time is a little tight -- I'm going to find a helpful link.
Finally, bankrate says the average 30 year rate now is about 3.54%. So see if you can get something lower than that 4.25%
A welcome to Rachel Sheedy, the managing editor of Kiplinger's Retirement Report -- and thanks for the link on refis.
Kiplinger, while we are all free to comment on any question, the moderator usually assigns a question to us to make sure every question has at least one comment from an advisor.
Ronnie, Matt and Lea Ann might have some thoughts on the short sale but in my experience, you are at the mercy of the bank's time line. Try to get a specific contact there who you can talk to so you can remind them that having the sale go through is to their advantage.
I do not have a lot of exposure to short sales. As I understand it, the bank is not very motivated until you stop making payments. Have you stopped payments?
Margaret, it's Robert Long here from Kiplinger. A quick personal anecdote, as I am closing on my refinance tomorrow: I've gone from 5.375% on a 30-year fixed to 3% on a 15-year fixed. I think you can probably do much better than 4.25%.
Lea Ann, by virtue of being physically closest to NYC, I'm going to ask you to field Rebeca's question
Kiplinger, that was a great link on short sales. Not having to pay tax on the forgiven debt is huge.
Sorry to be late, Deborah Frazier here
a couple of questions first - is your rent in Florida covering your existing mortgage or are you out of pocket each month?
I don't have the numbers handy, but I do know housing prices are starting back up in NYC so waiting to sell if you can may make sense. Do you have any price appreciation figures for your neighborhood in NYC?
Welcome Deborah. Would like to assign you a question about debt from Frank
Ronnie I suggest you get the contact info from the attorney and call every day until you get some resolution. I hate it but often it is the squeaky wheel that gets attention first.
Hang in there Ronnie and keep doing the things you have been doing.
For Matt, please, our question from Steve R about finding out investment fees.
The first thing to determine is whether you are paying a commission or a fee.
Bobbie -- here's one on paying for college, often one of our favorite subjects.
Rebecca - to add to my earlier comment - if you do have extra money after the sale of your condo, it's usually best to pay off the mortgage when you are retired. At a minimum you can try refinancing to a lower rate but many banks won't write a mortgage for that low of a loan amount. Again, it might be better to pay it off.
Rebecca, it is very unlikely that many banks will want to refi such a small loan and even if they did, the cost would probably be too high in relation to the loan amount. What will you do for housing in FL? Won't you need the proceeds from the NY condo for that? If you have enough for that AND a large emergency fund (I suggest that retirees keep enough cash on hand to cover the difference for 3 years between the income they expect to receive and their spending) then you might consider paying off the rental mortgage. I don't think it should be your number one objective as you have money coming in from the rental so if you wish, simply keep paying the payment.
The commission or the fee are going mostly to your advisor. Second, you the prospectuses you receive when you buy an investment (or yearly in the mail as an update), those should list the imbedded cost of that particular investment.
Ram submitted that question well ahead of time, so I don't know if he's here for followup.