Consumer Rights : Home Ownership
Should I buy a house?
Home ownership offers several advantages over renting. It can be a good investment with tax advantages that increases in value over time, giving your security and independence.
Having a fixed monthly payment can help you control your budget. The decision to buy a home is an important one, and the more you know, the easier it will be and the fewer problems you are likely to have.
There are many informative brochures by government agencies and consumer groups that explain the process and give you ideas and suggestions about how to make the most of your home buying experience.
We recommend reading:
Home Buyer’s Guide from the Ohio Department of Commerce
Buying a Home from the U.S. Department of Housing and Urban Development
For an explanation of the different terms you will hear when you start to look for and try to buy a home, The Real Estate Marketplace Glossary from the Federal Trade Commission can be very helpful.
What are my options?
There are several different options for purchasing a home. You can apply for a mortgage directly from a bank or other lender, or you can use the services of a mortgage broker to help you find a mortgage that fits your needs and financial circumstances.
You may also consider buying property with a land contract, or under a lease with an option to purchase.
What is a mortgage?
A mortgage is a loan of money to help you buy a house or other real estate.
There are many different types of mortgages. In addition to the conventional mortgages offered by banks, other lenders and mortgage companies, there are several kinds of loans insured by different agencies of the state and federal government, such as the US Department of Housing and Urban Development (HUD), the Department of Veterans Affairs (VA), or the Federal Housing Administration (FHA).
These loans are designed to help those with low or moderate incomes or first time home buyers who may not otherwise qualify for a conventional mortgage. Some loans have a fixed interest rate of the entire period of the loan, and for some loans the interest rate will change over time.
No matter what type of mortgage you have, the payments have at least two components: principal and interest.
The principal is the amount of money you are borrowing, and the interest is the fee that the lender charges you in exchange for loaning you the money. Your monthly payments are divided between interest and principal over the life of your loan.
In the beginning, your payments will go mostly toward paying interest. After a time, more of your money will go toward paying the principal. Paying on the principal is what builds equity in your home.
Equity is the value in your home above the total amount of liens against your home.
For example, if you owe $50,000 on your mortgage, but your home is worth $75,000, and there are no other liens on your home, then you have $25,000 of equity in your home.
What is the difference between a home equity loan and a mortgage?
With a home equity loan, you are applying for a loan and using your home to guarantee repayment. You already own the home and have some equity built up.
When you take out a home equity loan, you will sign a mortgage giving the lender a lien on your property.
When you take out a loan using your house to guarantee repayment, a federal law, called the Truth in Lending Act, gives you three days to reconsider and cancel the loan without any penalty. You must be given two copies of a form explaining this right to cancel, with an explanation of how to cancel the loan.
Read more about the FTC Consumer Alert, Home Equity Loans: The Three-Day Cancellation Rule. You do not have this right if your mortgage is for the initial purchase of your home.
If you are refinancing your home, then you do have this three-day right to cancel.
In addition, Ohio law also gives you a three-day right to cancel a home solicitation sale.
What is a home solicitation sale?
A home solicitation sale is a sale of goods, such as new windows or satellite television, or services, such as home repairs or home improvements, in which the seller comes to your home or contacts you at home to make a sale.
An Ohio law, the Home Solicitation Sales Act, regulates this type of sale and gives you the right to reconsider and cancel the sale within three days.
In many of these situations, the company or person selling the goods wants you to finance your purchase with a home equity loan, or a loan that uses your home as collateral.
What can I do if I have problems with home improvements or home repairs?
Part of owning a home is maintaining it, or changing it to fit your family’s changing needs. Most contractors and repair or service people are honest and reputable, but some are not.
Several Ohio laws protect your rights if you are having problems with a company or person you have hired to do repairs or make improvements on your home.
You can also consult an attorney about your rights.
Refinancing is a process in which you pay off one or more existing debts with a new home loan. If you are not otherwise having financial problems and your credit rating is good, you may want to explore refinancing your mortgage to get more favorable terms, such as a lower interest rate, or to convert a variable or adjustable rate mortgage to a fixed rate.
Unfortunately, if you are struggling to make your mortgage and other debt payments, refinancing may seem like a good way to resolve your financial problems even though your income and expenses have not changed. In this case, refinancing can be bad idea that will cause many more problems than it solves.
A predatory loan is a loan that is designed to take unfair advantage of the borrower’s circumstances.
Most lenders are trustworthy, but unfortunately, some lenders and the brokers who arrange loans are not.
Predatory lenders direct borrowers away from more affordable loans and offer loans with higher interest rates, excessive fees and unnecessary costs.
Ohio recently passed the Ohio Homebuyers’ Protection Act to regulate the lending practices of mortgage brokers, loan officers and non-bank lenders who do business in Ohio, which you may want to review before you enter into any loans secured by your home.
What can I do if I can’t make my mortgage payments?
The best time to act if you are having trouble making your mortgage payments is before you fall behind.
All reputable lenders have divisions of their lending business called “loss mitigation departments” set up to try to work with borrowers to forestall default and foreclosure. The lenders have a number of options called “work out” agreements to either change the terms of your loan or come to some other agreement that will avoid foreclosure.
Even if you have fallen behind in your payments, you should still contact your lender to discuss work out options. For more information about work out resolutions, you may contact the Ohio Department of Commerce.
You may also want to read Mortgage Payments Sending You Reeling? from the Federal Trade Commission.
Often, a credit counselor can help you negotiate with your lender. If you are getting default notices from your lender, you may also start getting notices from companies offering to help or rescue you from foreclosure. You should be vary wary of solicitations to rescue you from foreclosure; there are many can artists that operate rescue scams.
We suggest you read Tips for Consumers on Avoiding Foreclosure “Rescue” Scams from the National Consumer Law Center if you have been contacted by a company promising to help you avoid foreclosure.
What if my house is insured by the Federal Housing Authority?
If you have a home loan that is insured by the government, your lender or your loan servicer, which is the company collecting your payments, has additional obligations to help you if you are having problems making your mortgage payments.
For information about these additional rights, you can call the Federal Housing Administration at 1-800-CALL-FHA.
If you are on active duty in the military, the Service Members Civil Relief Act gives you special protections from foreclosure.
What is foreclosure?
Foreclosure is the legal process your lender must follow to end your ownership rights to your home if you have failed to make your mortgage payments.
If you have failed to make your mortgage payments, and you have been unable to negotiate any work out solutions, your lender may file a foreclosure in the common pleas court of the county in which your property is located.
Before the foreclosure is filed in court, you should have gotten letters from the lenders notifying you of the default and accelerating the remaining balance due on the mortgage note.
What happens in a foreclosure?
Once the lender files the complaint in court, you will be served either personally by a deputy sheriff or precess server, or by certified mail.
After you receive your copy of the complaint, you have 28 days in which to file an answer. If you do not file an answer, or respond to the complaint, a default judgment will be entered against you.
This means the court will assume you do not disagree with any of the lender’s claims and will enter a money judgment against you and issue the order to proceed to the sale of your house.
If you do file an answer disagreeing with the lender’s claims, the court will set further hearings, perhaps take evidence, decide the claims, and issue orders. Learn more information about the court processes now.
What if I have received court papers for foreclosure?
If you are served with court papers for foreclosure, you should consult an attorney.
Even if you are behind in your payments, you may have claims or defenses to the suit, or an attorney could help you negotiate some kind of settlement less drastic than losing your house to foreclosure.
Use the Find Ohio Legal Help directory to contact your local legal aid program now.
If the court enters an order granting foreclosure, then an order of sale will go to the county sheriff. After receiving this order, the sheriff is required to have your property appraised.
After appraisal, the sheriff will schedule a sale, then advertise the sale of your property in the local newspaper or other legal publication for three consecutive weeks.
The sale is a public sale which is held either at a designated area in the courthouse or sheriff’s office.
Your property cannot be sold for less than two thirds of the appraised value.
The sheriff will report the results of the sale to the court, at which time the lender will ask the court to confirm the sale. This means the lender will ask the court to validate the sale, order a new deed for the buyer and distribute to money from the sale.
Once the court confirms the sale, the buyer is entitled to possession. If you have not moved out of the house, at this time the buyer can ask the sheriff to evict you. The buyer does not have to notify you that he or she is asking the sheriff to remove you from the house.
Can I save my house after the foreclosure sale?
Under Ohio law, you have the right to redeem your house after the sale and before the court confirms the sale.
This means you can buy back your house by paying the full amount that you owe, as well as other fees that the lender and the court have incurred.
Another way to stop the sale and possibly keep your house is to file bankruptcy. Bankruptcy is complicated, and you should consult a bankruptcy lawyer about your options to keep you home and prevent the sale in a foreclosure action.
You should also talk to a lawyer for advice and assistance if you are considering trying to redeem your house. Use the Find Ohio Legal Help directory to contact your local legal aid program now.
What is a lien?
A lien can be any of a variety of charges or encumbrances on property imposed to secure the payment of a debt or the performance of some act.
Liens are enforced by foreclosure proceedings. Liens can be imposed on real property or personal property.
Some of the more common real property liens result from judgments, mortgages, property bonds, and unpaid taxes. Some of the more common personal property liens result from security interests, attachment, and the furnishing of labor or materials in work on another person's property.
See foreclosure, judgment, judgment lien, marshaling of liens, mechanic's lien, mortgage, personal property, priority of liens, real property, security interest, tax lien.
See also the Forms & Education tab in this section for more information.The information in this site is not intended as legal advice.
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