Have you ever come across a deal that seems, well, too good to be true? We have. And so have millions of other consumers. These fraudulent offers are all too common in our society, and mortgages, especially government back mortgages like VA loans, seem to be a prime target.
Many of these too-good-to-be-true offers promise the following:
- Zero cost loans
- Skipping mortgage payments
- Extremely low interest rates
- Large sums of cash back
- Immediate funding promises
- Unsolicited offers
Before responding to an offer for a home loan, ask yourself if the offer meets your initial gut check. Here’s what to look out for:
Large Money Back Promises
Many times homeowners will receive cash back from escrow at closing. These funds are typically from old escrow accounts that are being closed out, but can also be loan credits and other refunds paid at closing. It’s not uncommon for borrowers to be misled on the amount of money they will receive from escrow.
Skipping Mortgage Payment
Another common marketing tactic is the promise that the borrower will be allowed to skip mortgage payments without penalty. The VA prohibits a lender from advertising this as a benefit, so consider it a red flag.
Extremely Low Interest
VA mortgages already carry below average mortgage rates, for the most part. But many lenders advertise what’s known as a teaser rate, in an attempt to get you on the phone. In many cases, these teaser rates are for 15-year loans and for borrowers with 800-plus credit scores and little, if any, debt.
Aggressive Sales Tactic
One final warning sign is the aggressive sales pitch. While it’s true that interest rates are always changing and it’s important to lock in a rate you’re comfortable with, you should never feel pressured to do so.
The above warning signs are not guarantees of a fake offer, but they should make you cautious. If you’re still unsure about the nature of the offer, you can contact the Consumer Financial Protection Bureau (CFPB) for more information.