Time For Your Mortgage Review

Your mortgage is one of the cornerstones of your financial foundation, so it's important that you take some time each year to ensure your fiscal "house" is in order. Each year's financial planning should include an annual review of your home financing to make sure that your loan is in line with your short- and long-term financial goals, as well as with what's happening in the marketplace.

Some people call it a mortgage checkup, some people call it a mortgage review, but whatever you call it, ensure that you take some time each year to take a look at your home loan. This is especially true right now. Given the current financing market, now is the perfect time to review your mortgage. Rates are low and you could benefit from a decreased monthly payment as a result.

A mortgage review is especially important if you've run into some life changes that could impact how your mortgage fits into your personal finances, such as:

• You need to sell. You are moving out of the area and will need to finance a new home. Obviously, this will be the most compelling reason to press the "reset" button on your home financing and engage in a review of your current loan, but even if a sale is far off on the horizon, you should be considering your options now.
• You want to leverage currently low rates. It could be that you didn't refinance during the "refi boom" a year or two ago. Now is the time to finally take advantage of today's low rates before they tick upward.
• The household income has changed. Perhaps you've changed jobs or experienced a raise or income decrease? Any of these factors might warrant a review. You could want to change the terms of your mortgage to pay it off faster or you might need to refinance to draw out some cash in order to compensate for a shortfall.
• You're expecting a major outlay. Perhaps the kids need braces or one of them is headed to college. Whatever the reason, you might need cash and refinancing with some amount of cash-out could make more sense than taking out a separate loan.
• You now qualify for a better loan. Perhaps your credit score has just improved and you now have access to better rates or terms for your loan. Now is the time to take advantage of your improved circumstances.
• You have an adjustable rate mortgage that is about to adjust upward. Or, you might have an ARM that won't adjust upward for a while, but you want to take advantage of currently low rates.
• You wish to eliminate your private mortgage insurance. PMI is required of borrowers who put down less than 20 percent on their home, and can cost anywhere from .25 percent to .75 percent of the loan value. In general, if you have a 22 percent equity position in your home, you will likely be able to remove your PMI, but be sure to check your state regulations as they vary widely. Look at comparable houses for sale in your neighborhood to help you gauge whether your equity has risen.

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