Experts offer 10 resolutions for homeowners

Tune up your mortgage. Check to see if your taxes and insurance are being paid correctly. Get a carbon monoxide detector.

These are some of the mortgage- and housing-related New Year's resolutions offered by experts. You don't have to tackle them all now, but as a homeowner, you would benefit by doing most or all of these things at some point in 2005.

• Give yourself a mortgage tune-up.

This resolution, offered by David Hall, senior vice president of Quicken Loans, sounds simpler than it is. The central idea is this, Hall says: "You can't put your mortgage in a drawer and be done with it."

Instead, he says, you have to view your mortgage as part of your overall financial plan, matching changing needs with changing goals. Among the most critical of these changing needs: the time you plan to live in the house.

When you bought the house, you might have planned to live there for 15 or 20 years. A 30-year, fixed-rate mortgage was a good fit. But three years after buying the house, your needs might have changed: Now you have triplets, or you have changed careers, or your spouse wants to quit full-time work and go back to school.

The changing circumstances mean that now you need to move within a couple of years or stay in the house but lower the monthly payments for a time, even if it means not paying toward principal temporarily. The situation might call for an adjustable-rate mortgage or an interest-only ARM, which have lower rates and smaller monthly payments than 30-year fixed-rate mortgages.

Hall thinks too many homeowners get 30-year fixed and waste money. Instead, they should get three- or five-year hybrid ARMs, which start out with a low rate that lasts three or five years, then adjusts annually after that. "Most folks tend to live in their home a little shorter than they might anticipate," Hall says. "When you take a 30-year, you're taking a risk. You're paying more and your risk is that if you move in three or four years, you've lost a lot of money."

Ed Powell, vice president of Lending Tree's GetSmart service, promotes what he calls "smart debt," which means you get beyond the payment. You get to all the terms of the loan.

Primarily he's talking about the length of the mortgage. "If you think you're going to move or your financial situation could change over the next 24 to 36 months, what's the right loan for that term?" he asks. Do you want to pay points for a loan you'll have for two years? Do you want to keep a 30-year fixed on a house that you'll own for three more years?

At the beginning of the year, or on the anniversary of the loan, think how much longer you have before the rate adjusts (if it's an ARM), how much longer you'll be in the house, and whether any big changes are coming soon -- new children, a business startup, college, retirement. If so, it's possible that you could benefit by refinancing. This is especially true if you have an ARM that's set to adjust this year and you expect to remain in the home indefinitely.

• If you have extra cash, pay it toward principal and confirm that it was properly applied to your mortgage balance.

This resolution, offered by Gary Bierfriend, corporate president of MortgageIT, can dramatically reduce the repayment period. If you make 13 monthly payments every year, you can pay off a 30-year loan in about 23 years. That saves beaucoup buckage in the long run. Bankrate has a mortgage calculator with an amortization table that lets you play out the different possibilities with your mortgage.

There are two good ways to make an extra monthly payment every year. You could simply make an extra payment at a time of your choosing, or you could divide your monthly principal and interest by 12 and add that amount to each monthly payment.

• Review your credit report.

"I think most Americans don't know their credit score," Hall says, and he thinks that should change. You're entitled to free credit reports annually and you should check them for inaccuracies and for any suspicious activity that suggests that someone has stolen your identity.

• Confirm whether the mortgage servicer is paying the insurance and taxes correctly.

If you have a mortgage, your property taxes and homeowners insurance probably are included in your monthly payment. A mortgage servicing company is supposed to accumulate the money and pass it along at the proper time. Usually you find out that the servicer has goofed only after you receive late notices from the county and insurance company.