When purchasing a home, the majority of buyers will need some form of financing for the transaction. In most cases, this takes the form of a home loan issued by a bank or other lending institution. Mortgages are the most common form of home loan arrangement.
There are many different types of mortgages, each with different payment plans and interest rates. Mortgages allow the purchaser to make monthly payments on the property, and eventually become the owner of the property.
Home loans can also cover other aspects of residential property, such as a home improvement loan. These are taken out for the purpose of repairing or upgrading one’s home, or making additions to the property. However, the majority of home loans issued are mortgages.
What Are Some Legal Issues to Consider with Home Loans?
Home loans are major legal transactions that can have long lasting and far-reaching effects.
- Contract laws: Home loans must generally be finalized in written form. As such, they must meet state and local contract laws in order to be valid. Breaches of home loan agreements are treated like breaches of contracts, and often result in contract remedies like a damages award.
- Interest rates: Interest rates are a central part of home loans. Some home loans have fixed interest rates, while some involve rates that change over time.
- Foreclosure: Failing to keep up with home loan payments can lead to foreclosure. You can avoid foreclosure by selecting the right home loan plan, and by having a lawyer review your documents.
- Fraud: Mortgage fraud is a common occurrence, especially for younger or inexperienced buyers. You should only work with certified, licensed mortgage representatives working for legitimate companies.
Also, other areas of law can affect home loan transactions, and vice-versa. For instance, filing for bankruptcy can sometimes change a person’s loan obligations. A divorce proceeding can also change home loan obligations. You should keep yourself informed and updated on your home loan status anytime you become involved in a major legal development.
Do I Need a Lawyer for Home Loans?
Home loans are often the best way for people to become home owners. In order to avoid legal issues and legal disputes, it is highly advisable to hire a real estate lawyer for help with home loans. Your attorney can help go over the legal documents for a home loan. Also, if you need to file a lawsuit over a home loan, your attorney can assist you with the filing and in court.