Cancellation Rights

Cancellation Rights

o The "Door-to-Door Sales Rule" (or "Cooling Off Rule") gives you
the right to cancel certain purchases costing $25 or more. Notify
the company in writing by midnight of the third business day
following the sale. Saturdays are considered business days, but
Sundays and holidays are not.

o The seller must tell you about your cancellation rights and give
you two dated copies of a cancellation form showing the seller's
name and address and explaining your right to cancel. o These
Federal cancellation rights apply to purchases made in locations
outside the seller's normal place of business, in other words, at
a house party, a temporarily rented room or in your home.

o States might have additional cancellation laws that protect
consumers. Check with your state or local consumer protection
agency for your rights.

o To cancel a contract, sign and date one copy of the
cancellation form. Mail it within the three-day limit, making sure
it's post-marked before midnight of the third business day.
Sending it by certified mail will show proof that it was mailed.
o If you were not given the cancellation form at the time of sale,
your right to cancel continues until three days after the seller
finally gives it to you. You can write your own letter cancelling
the sale and send it return receipt requested.

o Once you cancel, you have a right to a refund within 10 days.
The seller must let you know when the product will be picked up and
must return any paperwork and trade-ins within that time. o
Within 20 days, the seller must pick up the item or reimburse you
for any shipping expenses if you send it back yourself. If you do
not return it, you still are responsible under the
contract.

o Extend your rights! If you paid by credit card, canceled the
contract within three days, have not yet paid the credit card bill
and still have a problem getting a refund, dispute the charges with
your credit card company under the Fair Credit Billing Act, (See
the section on Credit, page 19.)


Home Improvement

o Plan ahead. Know what you want or need to have done before
contacting a contractor.

o Get detailed estimates from reputable contractors. Contact your
local or state consumer agency and Better Business Bureau for
information on contractors' licensing or registration
requirements, complaint records and for brochures containing
advice.

o Contact your local building inspection department to check for
permit and inspection requirements.

o Call your insurance company to find out if you are covered for
any injury or damage that might occur and be sure your contractor
has the required insurance for his/her workers and
subcontractors.

o Insist on a complete written contract. Know exactly what work
will be done, the quality of materials that will be used,
timetables, the names of any subcontractors, the total price of the
job and the schedule of payments.

o You have cancellation rights (usually three business days) in
many home improvement contracts. Before you sign a contract, check
with your local consumer agency to find out if you have
cancellation rights and how they apply.

o Understand your payment options. You can get your own loan or
the contractor might arrange financing. Be sure you have a
reasonable payment schedule at a fair interest rate.

o Some state laws specify payment schedules, for example, only
allowing a certain percentage of the total cost to be made as a
down payment. Contact your state or local consumer agency to find
out what the law is in your area.

o Lien rights, which might give the contractor or subcontractors
the ability to "attach" your home for unpaid bills, vary from state
to state. Ask your local consumer agency to explain the situation
where you live.

o You need to be especially cautious if the contractor:

- comes door-to-door or seeks you out;

- just happens to have material left over from a recent job; -
tells you your job will be a "demonstration;"

- offers you discounts for finding him/her other customers; -
quotes a price that's too cheap;

- pressures you for an immediate decision;

- has workers or suppliers who tell you they have trouble getting
paid;

- can be reached only by leaving messages with an answering
service; or

- drives an unmarked van or has out-of-state plates on his/her
vehicle.


Home Financing

o Check the real estate or business sections in the newspaper for
information on current interest rates. Call several lenders for
rates and terms based on the type of mortgage you want. o When
buying a newly constructed home, compare the interest rate and
terms offered through the builder's sales office with those offered
by other lending institutions.

o When interest rates go down, you might save money by
refinancing, but you probably should not refinance unless the new
interest rate will be at least two percentage points below the rate
you're paying currently.

o For an adjustable rate mortgage, or "ARM," find out the "cap" or
the maximum interest rate that can be charged during the life of
the loan. Ask how often the rate might change and what
determines the rate change.

o Get a complete list of "closing" or "settlement" costs and find
out which costs will be refunded if your loan is not
approved.

o Be wary of financing that is based on "negative amortization."
While the payments might be lower than in other types of loan
agreements, they're not enough to cover the monthly interest
charges. The portion of interest that is left unpaid is added to
the principal, which means that each month, the borrower pays
interest on a higher amount than before. With negative
amortization, the debt actually keeps increasing rather than
decreasing. You could end up owing a lot of money at the end of
the loan or losing your home.

Home Equity Credit Lines

o Although a home equity credit line might allow you to take tax
deductions you could not take with other types of loans, your home
will be at risk if you cannot make the monthly payments. o Some
questions to ask when comparing home equity loan offers: - How
large a credit line can be extended?

- How long is the term of the loan?

- What is the minimum monthly payment? Is there a maximum? -What
is the annual percentage rate?

- If the interest rate "floats," or is adjustable, how much can it
increase at one time? Is there a maximum rate?

- Are there any annual fees or transaction fees?

Reverse Mortgages

o If you own your home, a reverse mortgage loan will pay you in
monthly advances or through a line of credit. It lets you
convert your equity into cash which you can use for any purpose,
while retaining your ownership in your home. Before you sign, be
sure you understand all the terms and conditions.

o Interest rates on this type of loan might be higher and are
charged on a compound basis. Application fees, points and
closing costs also might be higher than other types of loans.
Interest rates are not deductible on your income taxes until you
repay the loan in full. There will be less equity for you and your
heirs in the future.

For more information or to file a complaint, contact:

Department of Housing and Urban Development
Office of Single Family Housing
451 Seventh Street, S.W., Room 9282
Washington, D.C. 20410
(202) 708-3175

State and Local Consumer Protection Offices
(See the list beginning on page 70.)