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

  • 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 live in an senior apt complex. My neighbor died next door to me it was the end of the month the apt manager when the kids came to move the furniture out was given paperwork stating they now owed next month rent and charges which totaled 1200 the rent was 565.00. The manager presented it in a hostile manner. The kids didnt have the money to bury their parent let alone pay this bill and the reason for the bill in the first place? Because a proper 30 day notice wasnt given. How the hell are you suppose to give a notice when you have dropped dead literally. Is that legal?
  • My hoa and I share a commom wall,the way I read the CC@R they are responsible for at least half the repair and 100% if by negligence. They have watered the wall instead of the landscaping and everywhere the water hit, the mortar has corrded. No that the wall is in need of repair they claim they are not responsible for the wall at all. What is the Arizona laws on common walls? and what recoarse do I have to get the wall repaired? There are at least 6 houses on my row that need repair.
  • I listed my granddaughter as 18 month old. No fence or gate was around the pool from back doors of home, as required by permit under AZ Law. The lessor had a real estate agent as did we. The lease was broken, accepted by the lessor. The lessor does not want to refund $3,900.00 security deposit. The exterior fence from driveway also was not self closing either and we have pictures of both. Did the lessor break the AZ law by entering into a legal contract and not have a Permitted, Inspected fence and self closing gate around the pool, Knowing an 18 month old be occupying the leased home?
  • I recently bought a home, and moved out of a rental property and they sent us an itemized list of items after we moved and I did a final walk through with them and charging us falsely what can we do to dispute these items?
  • My husband applied for a joint apartment and put on the application that there was a criminal record involved. He was approved given a move in date. After my information was reviewed, the application was denied because of a criminal record. Is that legal?
  • Is it illegal for in-laws to throw mine and my husbands stuff away or give it away without permission. Even tho we live in there home
  • Is there a time of year a landlord has to turn on the air conditioning
  • 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?
  • My husband quit claimed house to his brother before we were married but never had it recorded. Now he has quit claimed to me. Is this going to make me legally the owner with my husband or does it belong to his brother legally?

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

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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/