Question: I have an adjustable rate mortgage but I think the bank incorrectly figured my last interest-rate increase. I have tried to call them but haven’t made any progress. Until this is resolved, I plan to stop making payments. Do you think this is a good way to get them to resolve the issue?
Answer: You should never stop paying a loan for any reason, until it is completely paid off. When you stop paying, you hurt no one but yourself. First, when you stop paying your credit history and score quickly plummet. This can affect not only your future home purchases but even your current credit card interest rate. What’s more, your lender will almost immediately begin tacking on late penalties and fees to what you owe them. Rather than hear from the company about your possibly incorrect interest rate, you will hear from their foreclosure department, letting you know your property is heading for their foreclosure list. A better plan would be to write a letter, or have your attorney write one, to resolve the matter. Down the road, if the bank is indeed in error, you will be able to get a refund or credit from them. In the meantime, keep making the payments they say you owe.
Question: My spouse and I have a signed contract to buy a home. Now we are having second thoughts. My Realtor says we must go forward with the deal. Is she right?
Answer: Whether you can back out of the deal depends entirely on the contract you signed. This is one reason why it is so important to have a lawyer review the contract before you sign it. If the contract gave you a certain number of days to inspect the house and back out if you are unhappy with what the inspector uncovered, if you are in that time frame you may be able to get out of the deal. Or, if you are buying a condo, under Florida law you can back out up to three days after receiving the “condo documents” from the seller. Your contract may also give you the ability to end the deal if you do not qualify for financing, providing you applied in a timely fashion. If your contract does not provide for these provisions, or if you are past the time period to cancel for these reasons, you will likely have to go forward with the deal or forfeit your deposit. In any situation regarding a contract, it’s best to consult with an attorney and not solely on the advice of a non-lawyer.
Question: I have finally repaid my entire mortgage. Can I have a burn-the-mortgage party?
Answer: By all means, have a party. But don’t burn your actual mortgage, nor your satisfaction of mortgage, indicating that you have paid. You never know when you will need those papers should the bank erroneously later claim that you aren’t paid up or doesn’t file the proof of payoff in the public records. So put the originals in your important-papers vault, and torch a copy at your celebration.