Dear Ms. Lank: I inherited my mother's condo in 2006, and would like to pay off the mortgage as soon as possible. Currently there is about $34,000 left on the mortgage, at 7 percent interest. I am able now and then to pay an extra $200-300 a month on the principal, but I vaguely recall you saying it would mess up the amortization with the company. However, on the monthly statement I send them, it has a place to list an additional amount to be applied to the principal. Can you clarify for me? -- C.T.
Answer: I can't recall what I wrote about messing up a mortgage amortization schedule. It might have been in answer to someone who wanted to make two half-payments a month, which would indeed result in late charges and complications.
Your plan to send in extra principal payments, though, is just fine. It's clear your lender is set up to handle them. Just be sure to check your mortgage statements, to make sure the money is properly applied and not just stashed in your escrow account.
The additional money you send in will yield the same return as if you'd invested it at 7 percent, which is a terrific rate to earn on savings these days, no risk, guaranteed. The only catch is that once you've sent it off, it could be hard to tap the extra funds quickly in an emergency.
Worried About Taxes
Dear Edith: I have been on my mother's checking account since my father passed away 18 years ago. My name was only on the account 'just in case'. I never received statements, or any income whatsoever from the account. My mother is in the process of selling her house. Will I have any tax liabilities if she deposits her proceeds in the joint account? I will not receive any of the money, and don't want any of it, but I don't want to pay taxes on it either. -- K.
Answer: If you're not on the title as one of the owners of the house, you won't have any tax liability when it's sold. Where your mother deposits her proceeds won't matter.