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refinancing

Monday’s need-to-know business news

May 23, 2022 By Liz Weston

Today’s top story: Interest rates on new federal student loans going up for 2022-2023. Also in the news: A new episode of the Smart Money podcast on yard sales and refinancing, what to do if you can’t afford car insurance, and how to find a savings account bonus.

Smart Money Podcast: Fruitful Yard Sale, and When Not to Refinance
This week’s episode starts with a conversation about how to have a successful — and moneymaking — yard sale.

What to Do if You Can’t Afford Car Insurance
Don’t drop your insurance. Instead, start by contacting your insurer about payment options and discounts.

Interest Rates on New Federal Student Loans Going Up for 2022-23
Federal student loan interest rates will increase over 1 percentage point; the changes go into effect July 1.

How to Score a Savings Account Bonus — and Know When to Skip It
Look online for top promotions.

Filed Under: Liz's Blog Tagged With: auto insurance, refinancing, savings account bonus, Smart Money podcast, student loan interest

Q&A: Here’s a retirement dilemma: Pay off the house first or refinance?

August 9, 2021 By Liz Weston

Dear Liz: My husband and I are retired, with enough income from our pensions and Social Security to cover our modest needs, plus additional money in retirement accounts. We have owned our home for 35 years but refinanced several times and still have 15 years to go on a 20-year mortgage.

With rates so low, we were contemplating refinancing to a 15-year mortgage just for the overall savings on interest, but we started thinking about the fact that, at 67 and 72 years old, it’s unlikely that both of us will survive for another 15 years to pay off this loan. Since that’s the case, we’re now thinking about taking out a 30-year mortgage, with monthly payments $700 or $800 less than what we currently pay.

Our house is worth around 10 times what we owe on it, and if we had to move to assisted living we could rent it out at a profit, even with a mortgage. We also each have a life insurance policy sufficient to pay off the balance on the mortgage should one of us predecease the other.

I know that conventional wisdom says that we should pay off our mortgage as quickly as we can. But an extra $700 or $800 a month would come in handy! Am I missing something? Is this a bad idea?

Answer: Answer: Not necessarily.

Most people would be smart to have their homes paid off by the time they retire, especially if they won’t have enough guaranteed income from pensions and Social Security to cover their basic living expenses. Paying debt in retirement could mean drawing down their retirement savings too quickly, putting them at greater risk of ultimately running short of money.

Once people are in retirement, though, they shouldn’t necessarily rush to pay off a mortgage. Doing so could leave them cash poor.

You are in an especially fortunate position. Your guaranteed income covers your expenses, including your current mortgage, and you have a way to pay off the loan when that income drops at the first death. (The survivor will get the larger of the two Social Security checks. What happens with the pension depends on which option you chose — it may drop or disappear or continue as before.) Even with a mortgage, you have a large amount of equity that can be tapped if necessary.

So refinancing to a longer loan could make a lot of sense. To know for sure, though, you should run the idea past a fee-only, fiduciary financial planner who can review your situation and provide comprehensive advice.

Filed Under: Mortgages, Q&A, Real Estate Tagged With: mortgage, q&a, refinancing, Retirement

Wednesday’s need-to-know money news

June 17, 2020 By Liz Weston

Today’s top story: Get your finances ready to refi your student loans. Also in the news: Watching out for COVID-19 student loan relief scams, complaints against financial institutions rise during the pandemic, and a beginner’s guide to employee stock plans.

Get Your Finances Ready to Refi Student Loans
You probably shouldn’t refinance most student loans until after Sept. 30. But you can get ready right now.

Don’t fall for COVID-19 student loan relief scams
Scammers are still working during the pandemic.

In the Pandemic, Complaints Against Financial Institutions Rise
Complaints are up over 31%.

A Beginner’s Guide to Employee Stock Plans
important basics you should know.

Filed Under: Liz's Blog Tagged With: complaints, COVID19, employee stock plans, pandemic, refinancing, student loan scams

Friday’s need-to-know money news

September 20, 2019 By Liz Weston

Today’s top story: Would student loan refinancing pay off for you? Also in the news: How store credit cards can leave you unprotected, the newest workplace perk that looks a lot like a payday loan, and the best (and worst) tippers in America.

Would Student Loan Refinancing Pay Off for You?
The type of loan you have matters.

How Store Credit Cards Can Leave You Unprotected
Fewer protections could leave you vulnerable.

The newest workplace perk looks a lot like a payday loan
Checking the fine print.

The best (and worst) tippers in America
Not a good look, Millennials.

Filed Under: Liz's Blog Tagged With: payday loans, refinancing, store credit cards, Student Loans, tipping, tips

Q&A: Limiting your rate shopping window

July 8, 2019 By Liz Weston

Dear Liz: We’re planning to refinance our mortgage and are concerned about generating multiple credit inquiries which would lower our excellent credit scores. Is there some kind of licensed, bonded ethical middle-agent who could get just one official credit report from each of the three bureaus and then send it to all the lenders I designate? Our FICOs are so good that we want lenders to compete for our refi business but don’t want the process itself to lower FICOs just for inquiries only.

Answer: The FICO formula has you covered. With the FICO scores most lenders use, multiple mortgage inquiries made within a 45-day window are aggregated together and counted as one. Furthermore, any inquiries made within the previous 30 days are ignored entirely. That allows you to rate shop for mortgages without dramatically affecting your scores.

The FICO formula extends this “de-duplication” process to two other types of borrowing: auto loans and student loans. Only similar types of inquiries are grouped together, however. If you shopped for both mortgages and auto loans, then two inquiries eventually would be factored into your credit scores, rather than just one.

Credit cards, personal loans and other types of borrowing don’t get the same treatment. If you apply for two credit cards while shopping for a mortgage, you would have three inquiries — two that are immediately factored into your scores and a third that would be counted after 30 days had passed.

Also, some lenders use older versions of the FICO formula that have a shorter rate-shopping window — 14 days instead of 45. If you want to be absolutely sure your mortgage shopping has a minimal impact on your scores, you can limit your shopping to that two-week period.

Filed Under: Credit Scoring, Q&A, Real Estate Tagged With: credit inquiries, mortgage, q&a, real estate, refinancing

Wednesday’s need-to-know money news

April 5, 2017 By Liz Weston

Today’s top story: Can’t refinance student loans? Try these tactics. Also in the news: 10-word answers to your biggest car insurance questions, 5 foods that raise blood pressure – and life insurance rates, and 5 ways to save on preparing your taxes.

Can’t Refinance Student Loans? Try These Tactics
Looking at the alternatives.

10-Word Answers (or Less!) to Your Biggest Car Insurance Questions
Short and sweet.

5 Foods That Raise Blood Pressure — and Life Insurance Rates
That burger could spike more than just your blood pressure.

5 ways to save on preparing your taxes
Keeping more of your money.

Filed Under: Liz's Blog Tagged With: blood pressure, car insurance, life insurance, refinancing, Student Loans, tax preparation, Taxes

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