Knowing What You're Signing

"Read the fine print" is probably one fo the oldest cliches when it comes to reading documents that are put forth for you to sign, but it is true, and many people will have stories to tell about being burned from signing a contract they did not fully understand or read. It is a very real threat, and most people would do well to take the time to read these tedious forms before they sign. Not only that, ask questions of the entity that is asking for the signed document, before signing anything.

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.

Documents of importance to comprehend fully would be, of course, a mortgage agreement. 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 unfortunate situation is a huge increase in home foreclosures 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. Inquire about service during the contract period and what recourse you have if your system fails or you have no response to an alarm going off. Another print item to look for or ask about is whether any fees, like monthly or yearly fees, are subject to change during the contract.

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. Be sure that you are aware of your options in coverage, and what is and is not covered. For example, if you're in a flood zone, make sure your policy includes this coverage. The deductible is important because this is what you will get stuck paying regardless of the damages.

A perfect example of what can happen when insurance documents or coverage is not understood is when local flooding occurred and people went to make claims. 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.