Personal Finance: Ask the Experts

Get advice on money matters from The Bee's Claudia Buck and a panel of local experts

August 23, 2012
Should I fix my roof or pay off my mortgage?

"Q:" I will be getting around $80,000 in cash from the sale of a property. I have 13 years left on my mortgage, with $70,500 remaining in principal. The house desperately needs a new roof and a new driveway. If I pay off now, I will be saving $1,000 per month to use for the repairs. Should I invest the $80,000 or pay off the mortgage?
-- Zia, St. Peters, MO

Your note says that your home "desperately" needs a new roof, so it seems to me that making that repair is a priority.

I would use a portion of the cash to repair the roof, and depending on how bad the driveway is, maybe make that repair as well.

You didn't indicate if any taxes will be due on the $80,000 you will be receiving from the sale of your other property, but if so, you need to reserve for that as well.

The decision on whether to use the amount left over for investing or paying down your mortgage, should be based on a number of factors:

• The interest rate on your mortgage.
• Expected investment earnings, based on your risk tolerance and investment horizon.
• Your income tax bracket.
• If there are any large purchases that need to be made in the near future.
• The balance in your emergency fund.
• Adequacy of your retirement savings.

Make sure you take all of the above into consideration before using the whole $80,000 to pay down your mortgage.

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Meet Our Financial Experts

Claudia Buck

Claudia Buck is The Sacramento Bee's personal finance columnist. Read all her columns here. Contact her at cbuck@sacbee.com

Terri Carpenter

Terri Carpenter offers advice on job hunting, retraining and career counseling. Carpenter works at Sacramento Works Inc., the career and job training arm of the Sacramento Employment and Training Agency (SETA). With 15 years in the field, she has hands-on experience with everyone from first-time job seekers to career professionals seeking advice after a layoff or looking for a mid-career change. Ask her a question.

Carlena Tapella

Carlena Tapella is a partner in the law firm of Webb & Tapella Law Corp. in Sacramento. The firm specializes in estate planning and probate, such as estates, trusts, conservatorships and litigation. She is a past president of the Sacramento County Bar Association's Estate Planning & Probate Section. Ask her a question.

Kimberly Foss

Kimberly Foss, certified financial planner, is the founder of Empyrion Wealth Management in Roseville. With nearly 30 years in the financial industry, her clients include women in transition, small business owners, retirees and "pre-retirees." Ask her a question.

Jesse Weller

Gregory Burke, a CPA and tax expert with John Waddell & Co. in Sacramento since 1984, worked as an IRS tax auditor for six years. He’s a past chairman of the California Society of CPAs. Ask him a question.

Daniel Tahara

Daniel Tahara takes your questions about California taxes. Tahara, a spokesman for the state Franchise Tax Board, has 10 years of experience as a tax auditor. Ask him a question.



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