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5 Provisions to Review Before You Sign Your Financing Agreement
When it comes to signing a contract, whether it be for real estate, a loan, a lease, a car, boat or any type of service, most people will sign a contract with the intention of complying with its terms. But what happens when these contract provisions are enforced against you?
5 Provisions to Review Before You Sign Your Financing Agreement
- 1. REVIEW FINANCE AGREEMENTS FORTHESE 5 PROVISIONS BEFORE SIGNING Real Estate Attorney www.ProvenResource.com BUSINESS WARNING
- 2. When it comesto signing a contract, whether it be for real estate, a loan, a lease, a car, boat or any type of service, most people will sign a contract with the intention of complying with its terms. www.ProvenResource.com Photo Credit: www.carsdirect.com
- 3. They enter intoa contract feeling that its provisions would never apply to them, because they have no intention of defaulting. But in the event of unforeseen circumstances, these terms and provisions are meant for when one defaults. www.ProvenResource.com Photo Credit: dealerfraud.org
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- 6. Essentially, this termmakes one pay an additional percentage of the loan balance when paying the balance off in advance of the intended due date. For instance, a 3% prepayment penalty on $100,000 means that a fee of $3000 is owed to the lender. What a waste. Photo Credit: blog.bcaresearch.com www.ProvenResource.com
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- 8. Having a balloonpayment on a loan or promissory note means that the loan may be amortized over a specified time, but the entire balance is due prior to the loan being fully amortized. Photo Credit: thebasewarehouse.com.au www.ProvenResource.com
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- 10. A guaranty isa provision. A guarantor is an individual or company that signs an obligation on behalf of another bound to a contract, usually to ensure that the primary borrower will perform under the contract's terms. Photo Credit: mortgage-providers.com.au www.ProvenResource.com
- 11. In the eventthat the borrower fails to perform a service or make payments, the guarantor will be called upon to make the payments, pay the entire loan balance, or step in to perform the required service. Photo Credit: mdigroup.com www.ProvenResource.com
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- 13. Co-makers are basicallyjoint borrowers on an obligation. If one borrower doesn't pay, then the other remains liable for the debt. There are no requirements for a lender to pursue and exhaust all legal remedies against one co-maker before pursuing the other. Photo Credit: alamocitytimes.com www.ProvenResource.com
- 14. The lender canpick and choose who to pursue; one or both. It also doesn't matter that one co-maker may get all the benefit of a contract (known as consideration) while the other may have received nothing from the contractual relationship. Photo Credit: cincinnatireia.com www.ProvenResource.com
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- 16. Negative amortization occurswhen there is an increase in the principal loan balance because the monthly payments are deficient and fail to cover the monthly interest. Photo Credit: gazprom.com www.ProvenResource.com
- 17. The remaining balanceof interest due is added to the principal balance. A provision against negative amortization can be included in a contract and a default can be declared. Photo Credit: markeddancer7592.jimdo.com www.ProvenResource.com
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- 20. Since 1990, attorneyDavid Soble has represented lenders, loan servicers, consumers and business owners in real estate, finance and compliance matters. For over 24 years, he has been involved in thousands of real estate transactions and has successfully negotiated and saved millions for his business and consumer clients. ABOUT THE AUTHOR www.ProvenResource.com 31800 Northwestern Hwy. Suite 350 Farmington Hills, MI 48334 Phone: (888) 789-1715 Disclaimer: You should not rely or act upon the contents of this article without seeking advice from your own, qualified attorney.