6 Mortgage Fine Print Details You Can't Afford to Ignore

Whenever you're dealing with legal documents and contracts, it's tempting to just speed through the pages of small type and sign on the dotted line. But skipping over the fine print on the loan agreements when you're finalizing your mortgage could get you into trouble.

The fine print includes all of the terms and conditions, as well as the disclosures, that are involved in the signing of a contract. It may not be listed plainly on the main pages of the document, but signing legally confirms that you are agreeing to anything written within the contract — fine print or not.

Often, the fine print includes non-negotiable boilerplate language that's critical to every legal contract, but this nuanced legalese is there for a reason, and you need to understand when you should hesitate or push back based on what's included.

If the idea of sorting through all of the fine print gives you a headache, don't worry. We're here to make sure you make smart homeowner moves by specifically looking for these common mortgage fine print details that you can't afford to ignore.

It may seem odd that you could be penalized for paying your mortgage early, but, for the lender, early repayment means less interest on a standard amortizing loan — and that's not something they want to see evaporate because it's part of their profit.

However, you can often pay up to 20% of the loan amount in a given year and some states even have laws preventing lenders from charging prepayment penalties. 

Either way, this is something you should look for in the fine print, especially if you're trying to make financially responsible moves.

An adjustable-rate mortgage (ARM) is a mortgage that has a new fixed rate on a specific schedule, which could be every three years or five years, for example. Even if you think you understand the specifics, it's important to dig into the fine print on an ARM.

This will give you details on how often the rate can be reevaluated, what the rate cap is, whether there is a floor rate, and other particular details that have a big impact on how much you will pay over the life of the loan.

Most lenders will charge a late fee if you're delayed in paying your mortgage in a given month, but the fine print will give you the details on what that late fee entails. 

For example, you may have a grace period before the late fee kicks in or your state may limit the amount you can be charged in late fees.

You might assume that your mortgage payment is due on the 1st, but that's not necessarily true. The fine print will tell you exactly what the payment schedule is.

If the payment schedule assigned by your lender does not work for you, it is possible to ask your lender to change the date each month that the payment is due. 

They may not change it — but the worst they can say is no, and it doesn't hurt to ask before you sign anything.

Hopefully, you don't need to worry about defaulting on your mortgage, but you should make sure to read the fine print so you don't accidentally go into default.

It might seem that going into default only happens if you don't pay on time repeatedly, but it can also happen if you take on significant debt in another area or have issues with your taxes. The fine print will tell you exactly what constitutes a default so you can know how to avoid it.

Everyone makes mistakes on occasion, and, unless you have automatic payments set up, there could be a month where you forget to make your monthly mortgage payment.

That's why grace periods exist. Often, they're a five-day period where you have time to make your mortgage payment without incurring interest or damaging your credit. To find out what your grace period is, you guessed it — read the fine print.

Buying a home and taking on a mortgage is a huge financial move. To prepare yourself financially, make sure you have a full understanding of the implications of your mortgage, monthly payments, and the impact of missing a payment.

And, if you get into a situation where you're concerned you may not be able to make a payment, know that there are avenues you can explore to help pay for your mortgage.