Q: I'm 68 years old and my wife is 63. We're both retired. Our total monthly income is $900, all from social security payments. We have $16,000 and owe $12,000 on our home. Would you advise us to pay off the mortgage and bank the remainder, or continue paying $212 per month for 11 more years?

A: I assume your home mortgage is about 14 years old, is a conventional mortgage (not a VA or FHA one) and the interest rate is probably 5 percent to 6 percent. In those circumstances, you will be ahead financially if you continue paying your monthly mortgage charge, and invest your $16,000 in, for example, a money market fund currently returning 13 percent plus, with high liquidity.

Keep your eye on the return paid by a money market fund and on the average days to maturity of its portfolio, on a weekly basis. If the return begins to turn downward, then you may want to get into a good common stock or some good bonds.

Two money market funds which have good track records and are paying good returns are Rowe Price Prime Reserve (headquartered in Baltimore) and Fidelity Cash Reserves (headquartered in Boston). Both have toll free telephone numbers that give you daily quotes on their returns and average days to maturity of their portfolios.

Q: Will you please explain to me what "successor trustee" means, and if he can use me on his income tax return without my knowing it?

A: "Successor trustee" is the person who succeeds you as the trustee of a trust that has been set up by someone or some organization. Your successor trustee might have to use some of the figures and computations that applied to the trust during the time you were trustee, to help explain some of his figures and computations with respect to the trust. If he did this honestly and properly, I see no reason for its being unlawful or improper even though you may not be aware of it.

Q: I am half owner of a two-flat building that has a 5 1/2 percent mortgage. The building is in top shape and quite modern. One month's rent from one apartment covers the mortgage, taxes and insurance with a small amount extra for any emergency repairs. I also own a single-family dwelling that was financed at 8 1/2 percent with 10 percent down. My family has lived here for three years, with improvements still needed. My question is, should I sell my home and put a second mortgage on part of the two-flat to purchase a bigger and newer home for my family, or keep my present home and invest in another income building of my own? If I do the latter, how can I be sure the second income building will pay for itself?

A: Why don't you consider renting your present home to a suitable tenant and purchase another, more suitable home for your family? If you have enough money for a down payment on another home, you can finance the remainder of its cost with a first mortgage on it. The interest rate on a first mortgage should be significantly less than the interest rate on a second mortgage. You may also be able to save yourself some money on interest rates by getting a "wrap-around" mortgage on part of your two-flat, rather than a second mortgage.

Whether you do this, however, or buy another "income building" (as you call it -- I presume you mean a two-flat or something similar), I would try to avoid taking a second mortgage on my property at today's high interest rates.

As to how you can be sure the second "income building" will pay for itself, you'll have to do a pretty careful feasibility study (or have one done for you by a real estate professional or qualified appraiser) to determine if the property will pay for itself.

Q: I have a two-flat building I purchased two years ago for $85,000. The mortgage has a balance of about $59,000. I want to buy another investment property, preferably a small apartment building. Can I use the equity built up in my two-flat building to help finance a mortgage on my new intended purchase?

A: Yes, you can use the equity in your two-flat building to help finance the mortgage on your new intended purchase. There are several ways this can be done. You can refinance with a new first mortgage on your two-flat building, put a second mortgage on it or put a wrap-around mortgage on it. Talk to your present lender (and several other prospective lenders) to see which method is the best, least expensive way to do this.