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Reading The Fine Print And Between The Lines
While a mortgage loan is disbursed, the borrower generally becomes so elated that he/she ignores the fine print that may be present on the mortgage documents. This could bring the borrower to heavy peril in future. Hence ignoring the fine print just in order to lay hands on the money as soon as possible is a very foolish thing to do. It is extremely necessary to spend time in reading the fine print, and then reading it over again. If needed, the services of some financial expert must be availed of.
Let us bring to light some of the key concepts that you need to focus on in the fine print of the mortgage report.
1.Balloon Payment – If the mortgage provider is claiming then the loan is not a balloon payment loan, then any mention of this term anywhere in the mortgage papers should perk up your radar. In a balloon payment, the borrower pays only the interest month after month, and the principal remains as it is. This principal would need to be paid at closure time, and it is well imaginable how hard that pinch would be to the person who’s thinking that the loan is being paid off bit by bit. Suppose if the balloon payment is not paid when the time comes, then the borrower would risk losing the home for which he/she had paid such heavy interests. Hence, it is necessary to verify that there is no mention of balloon payments anywhere in the papers.
2.Note – If there is a note in the mortgage papers, then it must be read through carefully. In the note the lender would assume the right to sell off the home if the repayment is not made in a certain length of time. Apart from this, the borrower would be obliged to pay whatever extra fees apply. The note could also equip the lender to take away any of the borrower’s other assets if the payments are not timely.
3.Notice – Notice is the length of the time for which the bank needs to notify you in case of a defaulted payment. However, sometimes it could be mentioned in the fine print that the lender does not need to give you any notice. Such a lender would have the right to sell off the home if the payments are defaulted without giving any notice. This could be the most dangerous thing to happen to a homeowner. If there is such a privilege provided to the lender, then the borrower must be very diligent in making the payments on time. Instead of checks – which are unreliable – the lender could make the payments faster through wire transfer. This would also ensure that the money is going exactly where it is intended to go. It must be read within the notice if the lender provides any time to make up for the defaulted payment, or it would simply take whatever action it intends to when the payment is defaulted upon.
4.Acceleration – If this is mentioned in the mortgage paper, then the borrower needs to be very, very cautious. Acceleration is the right of the lender to speed up the time when the mortgage loan is due and to ask for the entire amount right away if even a single payment is missed. The borrower must also check out if there is any timeframe provided by the bank within which to make the missed payment, or they will act immediately upon default.
5.Extra Fees – Almost every borrower knows that he/she needs to check for mention of any extra fees over and above what is already mentioned by them.
One more thing that the borrower must check in the fine print that every thing mentioned is agreed upon by the lender. If not, then the bank has the leeway to retract any of the features they have provided, and you would have no proof. The borrower must be particular that the closing fees, interests and other terms are agreed upon by the lender.
It could be very boring to read the fine print on the mortgage papers, but in the long run, it could be something that would save your home. If you are making a sign on a legal document, then you are agreeing to whatever is written on it, and you are obliged to undertake everything on it. Therefore you must spend time checking whether the mortgage papers are how you want them to be, and not a trap laid by the lenders on the less-informed borrowers. It is a good idea to show the mortgage papers to your friends, and to some people who understand finance so that you could get their opinions on what is written.
Adam Heist is a freelance writer with many years of experience writing articles on Bad Credit Secured Loan related subjects. Take a few moments now to visit our site and see what we have in store for you.
ACS provides non profit credit counseling, credit management and consolidation services to consumers
ACS provides credit repair, credit counseling and free consolidation information to consumers. ACS helps people solve debt problems by providing free credit counseling articles and resources. ACS is a non-profit community organization whose staff members have the training and experience to assist you.
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