VA Home Loan Junk Mail or a Scam?
I used a Veterans Administration (VA) home loan for my last house purchase. Even though I paid my entire mortgage off about a year ago, I still get offers like this envelope in the mail at least every week:
Inside the envelope I found a very nice letter from an out-of-state company that was offering me a refinance of my VA loan (which I don’t have anymore) at a rate that was worse than my old mortgage interest rate. So much for “Your VA Loan Now Qualifies for a Mortgage Rate Reduction!”
I get a lot of these offers, and while some may be legit, others are scams that target the military. The Better Business Bureau explains how these scams work:
You get an offer – via mail, email or even social media – touting mortgage refinancing just for members of the military or veterans. The advertisement mentions special offers, such as government programs for veterans. It may claim to be endorsed by the Department of Veterans Affairs (VA) or be part of the official Interest Rate Reduction Refinance Loan program.
You call the number provided, and the refinancing company “guarantees” you an excellent interest rate. It may sound like a great deal, but proceed with caution! This has several red flags. Real lenders never guarantee a loan rate upfront, and the VA does not contact homeowners about mortgages. This may be a case of misleading advertising, or it might also be an outright scam, where con artists charge upfront fees and then vanish with your money.
What they describe is EXACTLY what I get every week, if not multiple times per week. This particular offer had every single thing they mention.
How do you protect yourself? They recommend:
Don’t pay for the promise of a loan. It’s illegal for companies doing business by phone in the US to promise a loan and require payment before they deliver.
Investigate claims that it’s a government program. Scammers increase their credibility by connecting themselves to official or trustworthy institutions. Do your research and contact the government or your loan servicer first.
Legitimate lenders never guarantee a loan in advance. Real lenders will check your credit score and other documents before providing an interest rate and/or loan amount.
You are pressured to make a decision immediately. Phrases like “act fast” or “limited time offer” should be red flags indicating a possible scam. Scammers hope that time pressure makes victims more likely to make costly mistakes. Some legitimate companies use this sales technique, too, but you should never feel pressured to make a snap decision about something important.
Legitimate lenders don’t pressure you to pay via wire funds transfer, prepaid debit cards, or gift cards. These services are like cash. Once it leaves your hands, it is very difficult to trace and almost impossible to reverse.
What’s the bottom line? VA home loans are great, but get ready to be hit with a flood of refinancing offers, some of which may be fraudulent.