A yearly review gives you a current picture of borrowing costs without requiring a new loan decision every month. Use today's balances and remaining obligations. The original loan amount is part of the history, but it is not the amount on which every future comparison should be based.
Update the account facts
Record principal, accrued interest, current rate, required payment and remaining term for each loan. Note whether the rate can change and when a promotional period ends. Reconcile the figures with recent statements rather than relying on the numbers entered when the loan began.
Include any account transfer, payment arrangement or additional payment that changed the schedule. If a forecast assumes every payment was made on its original date, but actual dates varied, label the forecast as an estimate. The CFPB's consumer tools can help locate the relevant product information when a statement raises a new question.
Separate past costs from future choices
An origination fee already paid is part of the loan's total historical cost. It generally should not be counted again as a future cash payment. A new refinancing fee, by contrast, would be a new cost in the proposed alternative. Keeping those columns separate avoids making an old expense look recoverable simply by changing lenders.
For a hypothetical loan with eighteen months left, compare continuing for those eighteen months with the actual proposed alternative. Restarting the comparison at the original three-year term can exaggerate a refinance benefit or hide an extension in time. Check any payoff charge before assuming the current balance can be moved without additional cost.
Review the household fit
Compare the next year's payment calendar with known changes in income and expenses. Identify a rate reset, a final balloon amount or a loan ending during the year. Those events deserve a dated plan rather than a note that the average monthly payment is affordable.
Decide whether an optional extra payment remains sustainable. If circumstances changed, revise the optional amount while keeping the required installment distinct. There is no need to create a new borrowing transaction merely because you are reviewing the old one.
Save a one-page summary with the review date, figures used and any action chosen. Next year's review can then compare the forecast with the actual result, giving you a clearer understanding of which costs changed and why.
