Everyone knows the age old saying: “if it sounds too good to be true…” Well, consider this your official warning.
In an article originally posted by the Consumer Financial Protection Bureau and the U.S. Department of Veterans Affairs, both entities have released a joint warning order to service members and veterans with VA home loans.
The “WARNO,” as the CFPB press release called it, cautioned VA mortgage holders against falling for legitimate looking refinancing offers, that sound too good to be true.
According to the CFPB, unscrupulous lenders have been targeting VA loan holders with “aggressive and potentially misleading advertising and sales tactics,” designed to convince homeowners that refinancing is actually in their benefit. These letters look official as something coming from VA and contain many promises that sound too good to be true, but actually taking these offers will add thousands to your loan balance, and won’t benefit you much at all in the long run.
If you’ve received a refinancing offer that promises super low interest rates, thousands of dollars in cash back, skipped mortgage payments, “no” out-of-pocket costs and no waiting periods, do your research before responding to it.
The CFPB and the VA caution to watch out for the following tactics:
- Offers to skip one or two mortgage payments
- Offers to receive an escrow refund
- Low-interest rates without specific terms
- Aggressive sales tactics
Be prepared to: Understand that certain advertised benefits, such as no out-of-pocket closing costs, skipped mortgage payments, and escrow refunds, are costs that are generally added to your loan and increase the overall principal balance. These are all red flags that may indicate that the loan is less likely to benefit you. Before you proceed with a VA mortgage refinance, be sure to speak to your trusted mortgage advisor to help guide you through all considerations the long-term and short-term benefits and consequences of refinancing your VA loan.
If you would like to stop or reduce the amount of the offers you receive, you can:
- call 888-5-OPTOUT (888-567-8688)
- visit www.optoutprescreen.com .
- You can also put your phone number on the federal government’s National Do Not Call Registry to reduce the telemarketing calls you get at home.
- Visit www.donotcall.gov or call 888-382-1222 from the phone number you want to register.
The more you know about your loan and the VA in general, the better equipped you will be to deal with these situations.