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

  • I am thinking about having a yard sale. I have a steep driveway. Am I liable if a person falls due only to the steepness of the driveway? What if I put up a sign to enter at own risk?
  • I had a friend staying with me to help pay the rent. They left (without paying debt) and left several of their things at my house. I want the things out. How long do I have to store their belongings until I can get rid of them. I have informed them several times and they will not collect their things.
  • Re: an increase in monthly maintenance fees in a housing CO-OP (not apt, not condo). QUESTION: Is there a percentage maximum that the monthly fees may be raised? Our by-laws say it is 20% without resident/member/owner approval, but some owner-members say it is only 5% by AZ law. (That sounds like tenant/landlord law which shouldn't apply.) Thanks for the help.
  • Home I was renting was forclosed on and Purchased on short sale. When my lease was up my landlord gave me a 45 day notice to move. Now they want me to pay 4300 for redoing the house. The house was not in good shape when I moved in. I cleaned the carpet when I moved. Now couple of the charges are professional carpet cleaning, deep carpet cleaning, de order carpet, cabnets, counter tops, doors replacement. I was in the home 7 years. They want me to pay for them to redo home so they can sell. There was nothing wrong with these things they replace. One door had shifted. were and tear. Help
  • If i rent weekly and lived in the residents for 3 months.how much notice dose the landlord have to give me to raise the rent? This is a extended stay. They r are raising the rent to 3 times for January cuz tucson jem show. I must pay the month of January in advance or get out i was notified on 12 15
  • Clicked to renew my lease and got an email accepting that request. Went to log on to the website to sign the new lease and it was not available. Informed the apartment management and received an email saying they would write it up and send it, however I still have not received anything. Can they for some reason not renew my lease after the initial acceptance? My current lease is up at the end of June, if I did not want to renew I would have had to give 60 days written notice. Can they give me less than I am required to give them if they do not renew for some reason?
  • On 12/30, I entered into a lease in which it was discussed, agreed to, and I signed the addendum added regarding having a satellite dish on the property. It states that in compliance with FEDERAL Communication Commission, I had that right. On 1/3, Rey C of Satellite compny came out to help me exercise my right and was told by management that he couldn't install my dish, because they are issuing a notice to all residents that they need to have dishes removed. I was assessed fees for early termination of $360, and move in fee of $199. This blatantly a breach of contract, and violates federal law. Help
  • s there a Grandfather type law in AZ regarding HOA controlling house paint color within reason of the community standard? I am being told that my house color is no longer "approved" and I must repaint whole house (instead of touching up the wood trim with current color). This is in Scottsdale Ranch.
  • Does Arizona have any laws about the landlord calling/texting days before rent is due and EARLY morning of the day it is due according to the lease they have been doing this since moving in any info is appreciated thank u
  • new owners have taken over my appartment housing, I wanna kno what I can do, they say may bathtub is not clean enough, wanted me to clean the light switches with a tooth brush, and say the apartment, per policy must look like new at all times

STORIES

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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/