Don’t Expect Insurer to Match 21-Year-Old Siding
Question: Two months ago my neighbor backed her car into my house. My home, which was built in 1981, has a type of siding on it that isn’t manufactured anymore. The insurance company wants to replace the damaged siding with the closest thing they can find and call it good. I will admit that the siding they propose is a close match, but I don’t believe they are making a genuine attempt to correct the problem. I am honestly not looking to take advantage of the company, but my home siding matched before their insured driver backed into it and now it doesn’t. What can I do?
Answer: The question is what, exactly, you expect the insurer to do. Go into the business of manufacturing a discontinued siding, perhaps? Even if it could or would, the siding still wouldn’t match, you know. It would be new, whereas your siding is 21 years old.
Perhaps you’re hoping the insurer will replace all your siding. That’s not much more realistic than hoping it’ll go into the manufacturing business. You can always ask, but it’s probably not worth pushing the issue.
Your best course is to accept the repair and get on with your life. In a few years, the new siding will start to get that comfy, worn look the rest of your siding has, and you probably won’t even notice the difference.
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Refinancing of Multiple Properties
Q: I’m looking for unbiased information about refinancing my mortgage debt. I’m getting lots of unsolicited refinancing offers in the mail, but my concern is that I’ve been unemployed since March and I’m not sure the offers I’m getting reflect the interest rate I’d really pay. My wife and I owe $121,000 on our first mortgage, $51,000 on our second and $31,000 for a vacation condo. We’d like to get one loan to refinance all three debts. My wife makes $40,000 as a nurse, and I get a $12,000 pension from the military in addition to $17,000 in unemployment benefits that will end in a year. Our house is worth $189,000 to $200,000.
A: Your biggest problem isn’t your unemployment, because your income probably is adequate for a $203,000 loan. The problem is that you want to borrow more than your house probably is worth. Though some lenders do make these loans, you typically pay through the nose for them.
Even if your house is appraised for more than the loan, part of the money is going to pay for another property, which would make most lenders view this as a “cash-out” refinancing, said mortgage broker Allen Bond, president of the California Assn. of Mortgage Brokers’ southern Los Angeles County chapter. Cash-out refinancings tend to have higher rates and more restrictions on how much you can borrow.
If you did get a $203,000 loan, you wouldn’t be able to deduct interest on the amount that exceeds the value of your house.
A mortgage broker could give you some idea of your options, as well as what your payments might be in various scenarios. (The mortgage brokers association in your state can offer referrals.) You would need to compare those with what you’re paying now and factor in closing costs and other expenses of refinancing.
Unless your current rates are awfully high, it probably doesn’t make much sense to try to include all three debts in one refinancing. In general, you get the best deals in mortgages if you keep at least 10% equity in the property. In other words, you should try not to borrow more than 90% of the value of your home.
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What’s Considered a Good FICO Score?
Q: My husband and I recently requested our credit reports to verify that the information contained is accurate, because we are preparing to get a mortgage. We also got our FICO credit score, but we’re not sure what’s considered a good score. Can you tell us?
A: Different lenders have different standards for what’s “good” when it comes to credit scores, which are the three-digit numbers they use to gauge your credit-worthiness.
Usually anything above 720 will get you a good rate on a loan. About half of American adults have credit scores above this mark.
Note to readers: I erred two weeks ago in telling a reader that early-withdrawal penalties would not apply to his IRA distributions because he would be older than 55 when he leaves his job. In fact, penalties are waived for employees 55 and older when the withdrawals come from workplace retirement plans such as 401(k)s. IRAs don’t qualify for the over-55 exemption.
It is correct, however, that early-withdrawal penalties for IRA distributions can be avoided regardless of the account owner’s age as long as the withdrawals are based on the owner’s life expectancy.
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Liz Pulliam Weston is a contributor to The Times and a graduate of the personal financial planning certificate program at UC Irvine. She also is a columnist for MSN.com. Questions can be sent to her at asklizweston@hotmail.com or mailed to her in care of Money Talk, Business Section, Los Angeles Times, 202 W. 1st St., Los Angeles, CA 90012. She regrets that she cannot respond personally to queries. For past Money Talk questions and answers, visit The Times’ Web site at www .latimes.com/moneytalk.
