General Housing Information Article


Loans and Your Home: Know the Danger Signs

Getting a mortgage, refinancing a mortgage or taking out a home equity loan shouldn’t be scary - but the wrong agreement can cost you unnecessary interest charges and fees, and may even cost you ownership of your home. This information can help you protect yourself from risky loan agreements.

 

Possible warning signs of a risky loan agreement

Although many mortgage lenders are reputable, there are some lenders who may take advantage of a homebuyer. Here are some possible warning signs of a risky loan agreement. These are things that you want to look for if you are purchasing a home. One effective way to protect yourself is to learn about the lending process and about the mortgage lender specifically before meeting with a lender.  

  • The lender contacts you in person, at home, by mail or telephone

  • You are told you’ll be approved, regardless of your credit

  • You’re told you must lie about your income to get the loan

  • You’re told to stop making payments on your current loan or to other creditors

  • You’re told to send payments for your current loan directly to the person or company offering you the new loan

  • The interest rate may increase over the course of the loan - an Adjustable Rate Mortgage (ARM)

  • The loan includes a prepayment penalty

  • There is a large payment at the end of the loan - sometimes called a ‘Balloon’ payment

  • The lender pressures you to sign the papers ‘NOW’ if you want the deal

  • You’re told not to worry about the ‘fine print’ - sometimes the lender will pretend to explain it to you rather than to give you time to read it - don’t feel pressured – make sure to take the time to read the fine print.

  • You’re asked to sign, or ‘deed,’ your home over to the lender.

  • The loan is suggested to you by someone offering you home improvement repairs

  • You’re asked to sign documents with blanks or in a language you don’t understand

  • If Something Sounds Too Good to Be True - it usually is

HOW CAN I PROTECT MYSELF?

If you are not already familiar with basic real estate terms, it can be helpful to familiarize yourself on commonly used real estate terms before signing documents. Here are some commonly used terms:

  • Refinance: replacing an existing loan with one with different terms

  • Terms: refers to interest rates, repayment period, type of interest

  • Home Equity Loan: loan in which your home is used as collateral

  • Balloon Payment: a lump sum payment paid at the end of the loan term

  • Fixed Rate Mortgage: a loan where the interest rate does not change

  • Adjustable Rate Mortgage (ARM):a loan where the interest rate may increase during the life of the loan

  • Prepayment Penalty: a charge to pay off the loan early, usually when the loan is refinanced

  • Negative Amortization or Interest Only Loan: your loan balance INCREASES as you make your payments

If you are concerned with the terms of your loan agreement, consider talking to an attorney or housing agency before you sign it. If you have already signed the loan agreement and are concerned that you may have a legal issue, you may want to contact an attorney. If you believe that you have been the victim of consumer fraud, file a complaint with the Arizona Attorney General’s Office.


Comments:

QUESTIONS

  • In AZ what is the grace period for surviving family members to vacate a subsidized apt- Section 8 HUD housing of a deceased parent? . 14 or 21 days? I called HUD and they recommended I ask you as this is for Tucson, AZ
  • I am a new tenant on section 8 housing as a tenant doi have to stay in a apartment that has roaches and I'm constantly complaining. I feel no human being should have to be subject to live like this just because your low income. What can I do please help
  • My house foreclosed and was sold at auction on 4/4. On 4/5 I spoke with the new owner and he said he would give me until 4/12 to vacate. Today 4/9 I recieved a Forcible Detainer request form in the mail. DO I need to be out by today?
  • What can I do if the landlaord turns off the chiller system for the whole apartment complex and it's over 100 degrees outside
  • Can a son sign over his house to his father if he can no longer afford to make the payments?
  • My mother died sept 27. She had a will leaving her home to we three kids. Can we get a title change with this will so the property can be sold
  • years ago i signed over my home to my sister because I was told that if I owned a home I wasn't able to receive AHCCCS. I want to retrieve my home and have mortgage back in my name. Can this be done if my sister won't agree to changing the mortgage
  • We are on a multi- family well. There are 3 families ... one individual has a pipe leaking. This has been going on for over a week now...we come home from work he has turned off the water... Now the leak is so bad all the water is on his property and none in well reservoir.. My husband and I had to miss work today because there is no water to clean up in... we need this man to fix his pipe... this is unhealthy for the rest of us... now it is costing me money... loss if work and I have to call a plumber because there is air in the lines.. so who do I contact to make this man repair this pipe.
  • Is it legal in Arizona to break a lease because I am buying a home? If so what forms do I need to submit to the property management company?
  • I have a balloon note I didn't know I had one.now they want $163.000 buy the end of this month my morgager didt tell me and I didn't read the contract because I trusted him now I don't know what to do????????

STORIES

LegalLEARN

FIND LEGAL HELP

  • Please select your county of residence below.

    County:
     

OTHER LEGAL RESOURCES

  • State Bar of Arizona
    www.azbar.org
  • Maricopa County Bar
    www.maricopabar.org
    Referral number 602-257-4434
  • Pima County Bar
    www.pimacountybar.org
    Referral number 520-623-4625
  • National Domestic Violence Hotline
    800-799-7233
  • Bankruptcy Court Self Help Center
    866-553-0893
  • Certified Legal Document Preparer Program
    Link

ORGANIZATIONS

Documents

.pdf  AzMortgageResource.gov ReadSpeaker

.pdf  AZ Renters Guide ReadSpeaker

RELATED ARTICLES

Predatory Lending Schemes and Scams

Where to Find an Attorney for Specific Legal Advice

WHAT IF I RENT A HOUSE THAT'S IN FORECLOSURE - The Protecting Tenants at Foreclosure Act

FORECLOSURE DEFICIENCIES IN ARIZONA: Will I still owe money after a foreclosure?

Where can I find legal help with a foreclosure?

Did you know the Arizona Attorney General’s Office has a wide range of statewide assistance programs funded through the national mortgage settlement that could benefit you or people you know?

Legal Tips for Tenants

LINKS

Low Income Home Energy Assistance Program (LIHEAP)

https://www.lawforseniors.org/
https://www.lawforveterans.org
https://lawforkids.org/
https://www.azcourthelp.org/