This mortgage document contained scary fine print

Q: We began the process of refinancing our mortgage. The lender is a big bank. We canceled when we learned that the loan contained a clause that said one late payment would put you in default and the lender could then raise your interest rate by up to 5 percent. Is this kind of clause common?

A: "There are all kinds of mortgage products with all sorts of terms, but that one seems unusual," says Bud Carter, senior director of residential finance for the Mortgage Bankers Association of America.

Carter says that customarily a single late payment simply makes you delinquent, which results in a call from the lender asking you to explain yourself. Typically, "missing one payment wouldn't trigger foreclosure or changes in interest rates," he says, adding, "usually when you miss three payments that's when foreclosure starts to be considered by the lender."

As for the penalizing interest-rate hike, "a lot of times you see that on credit cards — if you miss a payment the interest rate goes up significantly. But it's unusual to see it in a mortgage loan unless perhaps people have impaired credit."

Carter says that the way to avoid getting stuck with terms and conditions you don't like is to do exactly what you did: Read all your loan documents carefully before signing and go elsewhere if you don't like what you read.

In particular, you want to understand whether your loan involves a prepayment penalty or a balloon payment — two things he says people sometimes don't realize they have until it's too late.

If you don't understand your documents, talk to your loan officer or go on-line for mortgage information. Besides the Mortgage Bankers Association site, www.mbaa.org, there are two independent sites Carter says provide a lot of good information. They are www.bankrate.com and www.hsh.com.

Q: I want to purchase a home. Without going to a real-estate agent, what's the least expensive way of finding out what prices are in the area I'm interested in?

A: First, don't discount contacting an agent familiar with your chosen area. That's how you'll get the best information. It won't cost you anything because agents commonly receive their sales commission from sellers, not buyers. They're very experienced in researching recent sales prices, can easily tell you what's currently for sale in your target neighborhood and for how much. Finally, just asking questions won't obligate you to buy. Most agents are happy to answer simply in the hope that you may become a future customer.

Beyond that, you can learn prices by visiting open houses. You can also go online. Most big local real-estate firms have Web sites with photos of almost every for-sale property. Some even have "virtual tours" to let you see inside these homes. Different sites have different geographic perimeters, so you'll want to search around to see which site best fulfills your needs.

Know though, that house hunting this way does have some drawbacks. You can't hone in on smaller neighborhoods or subdivisions within neighborhoods. You can't easily judge the size or condition of most properties nor their proximity to plusses (schools, shopping) or minuses (busy roads).

Q: I live in a 40-unit apartment building. Two months ago, management started charging tenants for water. I'm not happy about this because I'm out of town for six months of the year, and they're still going to charge me. Is it legal to do that without putting a meter on each apartment?

A: If you have a lease, your landlord can't suddenly start charging you for water; that would be an illegal change in the contract. However, if your lease is up and you're now renting month-to-month, then the landlord is free to change the rules — and having tenants pay for water is a rule more and more landlords are invoking.

Indeed, the Dupre1Scott Apartment Advisors autumn study reported that 55 percent of tenants in larger King County apartments complexes now get water bills, as do two thirds in Snohomish County and 25 percent in Pierce County. General rationale: to encourage conservation and keep rent increases down. There's no law requiring landlords to put in individual meters; those who simply split up the bill just can't do it in a discriminatory way. (Example: charging people of color more than whites.)

However a landlord can't begin charging you without first giving you 30 days' written notice, says attorney Richard Cohan. That 30 days should coincide with when the rent is due. And as Cohan points out, if you truly don't want to pay water, you only have to give 20 days' notice to move out.

Otherwise, you can always ask your landlord to not charge you during the months you're out of town. But don't be surprised if he says no. It he did this for everyone out of town on vacation, business or whatever, it could grow into a huge headache.