Q My sister and I own a condominium in Florida that has no mortgage. The market value is approximately $100,000. We have it rented for $800 per month. Our monthly condo fees are $160, leaving us $640. I plan to move into the condo later this year. We are both in our 50s and have no other investments and no real retirement savings. Should we take out a mortgage for about 50 percent of the value of the condo and invest the money in some other way?
J.J., via e-mail
A "Unless you can guarantee that you can make enough profits from your investments to substantially surpass the monthly cost of the loan, there is no real advantage in taking out a loan like this," says Ed Slott, a tax expert in Rockville Centre, N.Y. "You could presumably get a tax deduction on the mortgage loan; but you would still be risking your home to beat the market. What happens if you don't?"
Q My father-in-law passed on two years ago at age 95. He lived most of his life around Chicago. But his records disappeared from his apartment before my wife and I moved him to Wyoming toward the end of his life. We think he had a paid-up life insurance policy, but we have no record of it. How can we check this?
G. & G.F., Newcastle, Wy.
A "Unfortunately, there is no national or state database of insurance policies to check against," says John Calagna, a spokesman for MetLife insurance in New York. That means you will have do some sleuthing, he says. Call all major life-insurance firms and talk to customer-service reps. Give them your father's name and where he has lived. Also check with his former employers to see if he had continued a policy after leaving.
Finally, ask his former banks if they retained any of his photocopied checks that might list an insurer, Mr. Calagna says.
Q What are 12b-1 fees, and how are they assessed? Are they really "hidden"?
A 12b-1 fees are expenses mutual-fund companies pass along to shareholders to pay for advertising, and other sales costs. The fees typically range from 0.25 percent of fund assets to 1 percent annually.
Many financial advisers recommend that you avoid such fees, since they reduce a fund's net asset value. To see if a fund charges a 12b-1 fee, check out the prospectus. These fees are only "hidden" if an investor doesn't read the prospectus.
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