Don't Get Fooled by Wordy Contracts

No matter how many times it is repeated to us, most of us sign our name to hundreds, if not thousands of contracts, documents, affidavits, binders and other legally binding contracts in our lifetime, without reading all of the dubious "fine print" that is almost always attached.

As we all know, this common but dangerous practice can lead us into trouble financially or legally bind us to obligations we are unaware of if we're not cautious in at least skimming the contents, or the "meat" of any contracts or agreements we sign.

Often, we don't read the fine print of contracts because of the quantity of paperwork attached or because the legal wording is impossible to understand unless you're a lawyer. Sometimes the content is just so voluminous that is seems overwhelming to actually try to read all of it.

Mortgage agreements are of course one of the top documents when signing that you want to be fully aware of in every aspect. Ask, ask ask! If you don't understand, keep asking questions until you do. This is one of the biggest investments you will ever make. Recently, with all the predatory lending scandals, signed contracts for mortgages are all that much more important to read and understand fully before signing. Some claimed that they didn't fully understand the downside of signing for a variable rate mortgage, which ended up dramatically increasing their monthly payment.

The end result of this is the skyrocketing foreclosure rate on homes today. Another significant document to pay strict attention before signing would be agreements for cell phones. Make sure you know all of the conditions and obligations before you sign. If anything in the wording is unclear to you, don't be afraid to ask for an explanation.

You need to know ahead of time how long the contract is binding for and what kind of services they have if your phone is in need of repair, lost or damaged.

Also, if you are installing or purchasing a security system for your home, pay strict attention to the document you're signing.

Most security companies have a multi-year contract obligation. Ask about what type of recourse you would have if the system somehow fails or is not up to your standards. Find out if the monthly fee is subject to any increases during the contract duration.

Reading insurance contracts is another confusing issue for many of us. I think the last thing anyone would want to read if given the choice is an insurance contract. They are getting better as time goes on and insurance regulators are requiring more "everyday" language in insurance documents, but it still can be quite an undertaking to really decipher what they say and mean. Make certain you are clear on your options and know what is and is not covered. Know what the deductible is in advance.

A recent example of this took place locally with severe flooding in my area that occurred about a year ago. Most home owners thought their insurance would cover the flood damage, and unfortunately when there was actually a claim to be made, found out that it did not. The explanation for the lack of coverage was that the homes were not in a flood plain zone.

With the utility companies all offering so many options today, watch closely for terms and duration of the contracts that apply. If they offer you an unusually low price, make sure you know how long it will be at the introductory price. Find out the maximum amount your cost can be for the duration of the contract.

It sounds so simple to read all the fine print before signing anything, but the fact is very few of us do take the time and ensure we understand all the details first.

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