The VA Loan program is an amazing benefit for Veterans. However, like all things that are almost too good to be true, you may run into some scams, misinformation and misdirection. Hopefully, this article helps you spot these and keeps you from getting scammed.
Many thanks to Jennifer Beeston for all her insights on the topic. She’s a mortgage originator who’s also a consumer advocate and vocal crusader for mortgage transparency.
1. “The VA Recommended ME” or “I’m a VA Lender”
The first scam is when someone says they’re recommended by the VA. If they say something like, “Oh, well, the VA recommended me,” or, “I’m the VA lender,” or, “I’m the VA.” Then there’s the best one: “When you’re applying with me, you’re applying with the Veterans Administration”. No, you’re not.
That’s all nonsense. Here’s the deal. There are certain lenders that can sell directly to the VA administration via Ginnie Mae. These include Guaranteed Rate, Bank of America, Wells Fargo, Chase, and others. There’s a lot and it doesn’t matter because the VA doesn’t recommend any specific lender, EVER!
The VA will never say, “You need to use this lender.” So if someone’s telling you that they’re working with the Veterans Administration to get you this loan, hang up on them. Just hang up. It’s nonsense. They’re trying to trick you.
The reason someone would talk to you like that is because they’re conning you, or selling you, or using your trust in the VA to make you trust them. It’s a con, because then they’ll say “Oh, well the VA administration says.” They’re not talking to the VA administration. They don’t have speed dial to it. It’s total nonsense. You’ll often see this tied in with the next VA scam, which is lenders that price VA loans super high.
2. Super High VA Loan Rates
A lot of people assume, “Well, it’s a VA loan. Aren’t all the rates the same?” No, they’re totally not. Jennifer recently got a loan where one lender was charging 4.625% for a VA 30-year fixed, whereas she was charging 3.875%. She wasn’t doing anything special or different. It was the same loan. The only difference is Jennifer wasn’t trying to make an extra $16,000 off of it.
VA loan rates are not all the same. There’s a base rate, but then the lender puts their margins in, and then the originator puts their margins in. So, depending on who you’re talking to, your interest rate actually could be a percent or more different. Bottom line, you really want to make sure you shop that rate.
And if someone says, “Oh, hey, I’m a good guy.” What does that have to do with anything? Like seriously? Because they’re a “good guy” doesn’t mean they’re not trying to rip you off on the rate. In fact, just telling you they’re a “good guy” is flat out weird. It’s like someone who’s like comes into your home with a knife and says, “Oh, hey, I’m a good guy.” They’re NOT a good guy.
So keep that in mind. Rates can be very different based on who is pricing your loan. So shop, shop, shop.
3. Businesses Names That Include VA or Military Wording
You’ll see a lot of VA lending companies or loan originators that have words in their names like “Veterans” or “Military.” Understand that just because the company name includes those words, it doesn’t mean they’re recommended by the VA (because no one is) or that they have the best rates. Some are great, some can be shady.
Companies will use those words in their names to make you inherently trust them. It makes sense from a marketing perspective, but don’t let the marketing influence your decisions.
Hero marketing. All veterans are heroes, there’s no disputing that. But you’ve probably seen ads that say something like, “For heroes, we do this.” Whatever they’re offering, 9 times out of 10, it will be buried somewhere in the price.
So if someone says, “Oh, you’re going to get a $500 credit because you’re a hero,” I would call another lender and say, “Hey, if I do the same exact interest rate, would I be getting a credit?” You probably would be. In fact, you might be getting a lower rate if you’re not using that special program.
Then there are the ads that are meant to emotionally connect with you. You’ll see an ad where the service member is coming home, and their kid’s jumping out of a box, and there are tears all around. Just remember, they’re only advertisements.
When it comes to money and it comes to rates, you need to shop. Even if you’re thinking you’re getting a special deal, you need to check and make sure it’s a real deal, and it’s not just marketing.
Hope these insights have helped. In case you’re interested, here’s Jennifer outlining these in a video.