The Annual Mortgage Check-up

Stick out your financial paperwork and say, "Ahhhh!" It's time for that annual check-up. Thankfully, this check-up doesn't require you to face your weight on that maddeningly accurate doctor's scale, or sit in a cold and drafty little room with an open hospital gown. Actually, it's a mortgage check-up that's in order, and making time for a quick review at year-end may yield some fruitful results.

Your year-end home loan review should examine the most common sources of potential savings: home equity lines of credit (HELOCs) and private mortgage insurance (PMI).

HELOC

If you have a HELOC, you might be feeling the pressure of rising interest rates. Take a few minutes to research the current rates for fixed first and second mortgages. These rates are still near historic lows, and may be significantly lower than what you're paying on your HELOC. Locking in a low fixed rate now could create significant savings over time.

You have two options for refinancing your HELOC:

• Combine the HELOC with your first mortgage through a refinance home loan.
• Convert the HELOC by itself into a fixed-rate home equity loan.

The best choice for you will probably depend on how your first mortgage interest rate compares to current rates available.

Private Mortgage Insurance

Are you paying PMI every month? Did you know that you could cancel it once your loan balance drops below 80 percent of your home's value? Even if you haven't paid down much of your home loan, a large increase in the property's value could eliminate the need to pay PMI. Find out what your home is worth, and compare this to your loan balance. If the loan balance is less than 80 percent of the home's value, give your bank a call. The lender may need a written appraisal, but your monthly savings from cancelling the PMI will offset this cost down the road.

A straightforward review at year-end keeps your home financing as lean and trim as possible. In other words, you'll have a clean bill of mortgage health, which is just what the doctor ordered.