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

  • 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.
  • If a seller provides a counteroffer on a property, does the seller have to approve the offer in writing or in a new contract?
  • 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
  • Renewing a yearly lease, can the landlord raise the rent by $100 if the apt. (been in 5yrs), has not been upgraded,like the others, has a roach infestation, all in all in bad shape. Can't move bad credit, collecting unemployment. The apt. is worth $400 that I've been paying, now they want $545?? Help!!!!!!
  • I have sold my manufactured home (Personal property?) on a rented lot in AJ. Are there any rules or regulations as to who and how the check for the sale is sent to me? Can my broker and/or agent deposit the money for me in an account if I'm not able to attend the closing? Thank you.
  • My neighbor is restoring his classic car. There is grinding and hammering. Can he be fined for doing this work in his garage making the grinding and pounding noise? I was told as long as he stops by 8pm its ok what is the truth on this. I can't hear it inside but can when in my backyard at the pool . This is in the 85032 zip
  • I recently rented a room for my wife and I from a couple in Phoenix. I paid a deposit and three months rent in advance totaling $1625. I received signed receipts. Before moving in the landlord changed our original agreement and asked for a separate fee for utilities. We had agreed on a monthly rent charge that would include utilities.I informed the landlord that if he could not adhere to our agreement I would remove my property and wanted a refund. After considerable difficulty I was allowed to do so but a refund has been refused. A lease was also refused. I never stayed in the home even once.
  • The property management company was aware that there is a mentally ill and violent criminal in our condo complex. I did not know this. Can I legally get out of my lease because they did not divulge this information? No one is safe here, he's threatening people's lives, is in and out of court. Thank you
  • Just moved out to AZ, my girlfriend and I have a house with a pool and a walled in back yard. She asked if it is legal to sunbathe without a swimsuit or any clothes on. I know there are public exposure laws, but does it make a difference that is in my own property and with an enclosed yard? Or if a neighbor looks over my wall and sees her and reports it, are we in the wrong?
  • A friend came to visit me in AZ and was considering moving here... he filled a full wardrobe of clothes at my place, even changed his drivers license to my address, then left a week later and never returned... the clothes have been sitting here since November 2014, he now reaches out to me 7.5mo later requesting i send them back to him in IL or he will take me to court... he was never a roomate, never on the lease... does he have any legal right to this stuff?

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/