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Ali Velshi answers your financial questions

  • Story Highlights
  • Velshi: If your mortgage holder sends threatening letters, stay in contact with them
  • Not using credit card accounts may benefit your credit score more than closing them
  • Buying property is a good option but other investments may be less risky, he says
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(CNN) -- The uncertainty of the economy is making almost everyone nervous about money. Some are wondering what will happen to their homes while others are terrified about never getting out of debt.

Ali Velshi responds to CNN viewers' questions about personal finance on "The Help Line with Ali Velshi."

Ali Velshi responds to CNN viewers' questions about personal finance on "The Help Line with Ali Velshi."

CNN's Chief Business Correspondent Ali Velshi answers viewers' money questions on "The Help Line with Ali Velshi."

The following is an edited version of the program.

Linda in Kentucky: We have two different adjustable rate mortgages on our house and we're starting to get threatening letters about the smaller mortgage. Can the smaller mortgage start foreclosure procedures before the larger one?

Ali Velshi: The first mortgage is the first lien against your house. They can actually start foreclosure procedures on the smaller mortgage but it's not typical because the first mortgage holder is going to want to protect its assets. E-mail your own questions to Ali

If you're getting threatening letters, the first thing you need to do is be in constant contact with them. Letters that don't get responded to escalate and once they've started foreclosure procedures it's much harder to get out of it.

Judy in Warren, Michigan: I am trying to pay off my four credit cards and I want to totally shut down the three of them that [charge] annual fees. ... What will this do to my credit rating?

Velshi: If you close a credit card account, you need to make it clear on your credit report -- you may have to write a letter to them -- that it was closed by you, not that it was closed by someone else.

A closed credit card account, particularly when you have a lot of debt, could look like somebody closed it on you and that could be read incorrectly.

Typically, if you've closed a credit card account and you've paid off that balance, your amount of available credit has reduced. This means that the amount that you actually owe could be larger in proportion to the amount of your available credit and that could hurt your credit score.

'The Help Line'
CNN's Chief Business Correspondent Ali Velshi provides financial advice.
Weeknights, 5-7 ET on Headline News

The bottom line is you can eliminate the balances on those credit cards if you have the discipline not to spend. This keeps your available credit there and doesn't hurt your credit score. But some people need to literally cut up that card and have the account closed so they don't run up balances on it.

It's better to pay off your credit card debt regardless of what you're planning to do with the credit card.

Terae in North Carolina: My wife and I are thinking about taking advantage of the economy and investing in a property. I'm a risk-taker and want to buy two properties but my wife doesn't want to buy any. We don't have any debt, so should we take advantage of this opportunity or do something more conservative?

Velshi: You're in a great situation. Properties tend to be a good investment over time. It kind of depends on where you're buying and what kind of property. But you have to be prepared to handle the nuances of owning a property: the upkeep it's going to take and the fact that you could sit around without renting it for some time. Video Watch Ali Velshi talk about money »

I'm not sure I'm a big fan of money being invested in something that's not getting you some returns. I don't see the point of buying a property and keeping it vacant unless you absolutely know it's going to skyrocket in value -- and remember what happened the last few years with people who absolutely knew it was going to skyrocket in value.

I would read a good book on it. Buying a property is a good option but there are many other forms of investments that will satisfy your need for risk and perhaps make your wife feel less exposed.


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