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


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.



  • My boyfriend and I have been together since mid 2005. He recently purchased a home in only his name. We are planning on getting married in april of next year. After marriage do I automatically become co- ownr? If we do not get married how long will it take for me to be considered co- owner without him actually havng to add my name to the title?
  • I purchased a condo in October 2019. My inspection identified several repairs needed. I was assured those were the responsibility of the HOA. What was not disclosed is that in November there would be a vote on a Special Assessment, which passed, and now I have a bill for $4800. The seller had been made aware of this for months, but never gave me that information during our negotiations. Do I have any recourse for the seller to be responsible for all or part of this special assessment since it was not disclosed on the statements provided to me?
  • I am considering buying a house in Mesa, and looked on the Maricopa County Recorder website fnd see that the owner is listed as a conservator with ownership with minor children as conservatorship. What does this mean? Does this mean minors can own property in AZ?
  • we are currently listed as owner's to a mortgage but signed transfer of property- deed papers to an investor of whom we have been making monthly payments to. We have been informed by the mortgage that our payments have not been submitted and that we will soon be in foreclosure. What can we do? This investor promised to assume the mortage as well as the property but really only filed tranfer of property and continues to collect our money, of which has been steady each month.
  • Can an HOA stop or fine a person for using a motorcycle stating that we are creating noise pollution? The motorcycle is my main form of transportation to work. I didn't see anything about use of a motorcycle during certain hours.
  • We got a HELOC and the loan was accelerated on Feb 28, 2011. Loan was sold to another company made the last payment on HELOC on 08/28/2012. We got a letter from new lender saying they charged off the debt on 05/08/2018. The letter also states “please be advised that we cannot bring a legal action to collect this debt or threaten to do so because the statue of limitations has expired. If you do make a payment, we may later be able to bring an action to collect this debt because the payment May start a new statue of limitations”. Has SOL run out, can they collect money if I sell home, 1099?
  • If you are not the landlord of some one who lives in the same home as you in the garage again I am not third landlord and this person doest pay the power bill it gets shut off I am forced to turn it on in my name and I told him he can pre pay me the 121st bill what his part would be or I would not turn on the power to the garage because I wasn't going to pay for him to use the power and not pay do I have that right?
  • I am working on a dispute with a home warranty company. I am trying to find where it states what is considered too hot in a home for it to be deemed an emergency?
  • When a couple parts after 2 yr living together is one intitled to what they paid for and has reciept
  • We own a ground floor condo. The condo above us is rented to some very noisy people, including loud repetitious boom-boom "music". Police have been here 4 times. What can we do? What proof is required to avoid the "he said, she said" problem? The boom-boom from morning to late night is making our home uninhabitable.




  • Please select your county of residence below.



  • State Bar of Arizona
  • Maricopa County Bar
    Referral number 602-257-4434
  • Pima County Bar
    Referral number 520-623-4625
  • National Domestic Violence Hotline
  • Bankruptcy Court Self Help Center
  • Certified Legal Document Preparer Program