Q: I am single with no kids. My current mortgage has a balance of $101,000 and a remaining term of 21 years. At my current rate of 5.87 percent, I should consider refinancing?
G.V., 49, Winter Springs
A: Yes, you should look into refinancing. In this historic low-rate environment, you could potentially save thousands of dollars by refinancing. Contact at least three mortgage lenders and ask each for a good faith estimate. This will allow you or your financial planner to review each and compare closing costs.
Next, calculate the savings per month. Finally, divide the closing cost by the monthly savings and this will tell you how many months it will take to break even on the closing costs.
Q: My 401(k) value has gone down a lot over the past few months, should I move to all cash for the next year or so?
D.B., 52, Winter Park
A: It can be difficult to ignore what is going on in the markets lately, but deciding to go all cash is convincing yourself that the market will go down more before you buy back in. Doing this is essentially trying to make two correct guesses, when to sell and when to buy back in.
With more than 10 years until you retire, the odds are the market will have recovered. Take this opportunity to re-evaluate how much risk exposure you are willing to take in your portfolio and maybe shift more into bonds, typically a lower risk investment.
Have a question? E-mail firstname.lastname@example.org. Include your name (only your initials will be printed), hometown and phone. Questions are answered by certified financial planners from the Central Florida chapter of the Financial Planning Association. Answers are for educational purposes only; you should also consult a financial professional. Questions and answers may be edited for space considerations.