Two VA Loan Red Flags Every Veteran Should Know Before Shopping for a Mortgage
Two VA Loan Red Flags Every Veteran Should Know Before Shopping for a Mortgage
The Misinformation That Is Costing Veterans Money on Their Home Loans
Veterans who are shopping for a VA loan deserve accurate information and a fair deal. Unfortunately the VA loan market includes some practices and claims that take advantage of borrowers who do not know what to watch for. Here are two specific red flags that every veteran should understand before they sit down with a lender.
Red Flag One: The Lender Who Claims the VA Sets Rates and Fees
If a loan officer tells you that the VA sets mortgage rates or that the fees being charged are VA requirements they are not telling you the truth.
The VA does not set mortgage rates. Each individual lender determines the rate they offer on VA loans based on their own pricing, their cost structure, and their assessment of the market. Rates vary from lender to lender on VA loans just as they do on conventional products and shopping multiple lenders to compare rates is not only appropriate it is essential for getting the best terms available.
The VA also does not set lender fees. The VA does charge a funding fee which is a government fee that helps fund the VA loan program and which can be waived entirely for veterans who have a qualifying disability rating from the VA. But the origination fees, lender fees, and processing charges that some lenders layer onto VA loans are not VA requirements. They are lender decisions and they vary significantly across the market.
As Keith Calabro explains he has seen origination fees on VA loans at 1 percent of the loan amount and considerably higher at some of the larger national VA lenders. On a $400,000 loan that is $4,000 or more in fees that the veteran is paying not because the VA requires it but because the lender charges it. His team waives the lender fee on all VA home financing whether it is a purchase or a refinance because that cost is not something veterans should be required to absorb.
If a lender is telling you their fees are set by the VA and non-negotiable that is a red flag worth taking seriously. Get a second opinion.
Red Flag Two: Lenders Who Imply They Are Affiliated With the VA
The second red flag is closely related and equally important for veterans to recognize. Some large national lenders in the VA loan space market themselves in ways that suggest or imply an official relationship with the Department of Veterans Affairs. Branding, advertising language, and sales approaches that invoke the VA's authority or suggest endorsement should raise immediate questions.
The VA is not affiliated with any private lender. The VA does not share veteran information with lenders. The VA does not endorse, sponsor, or recommend any specific bank, lender, or loan officer. Any lender whose marketing suggests otherwise is creating a false impression of official status that is designed to build trust it has not earned.
Veterans who encounter this kind of marketing should treat it as a signal to investigate further rather than a reason to trust more. The implied government affiliation is a marketing tactic not a credential.
Get a Second Opinion Before You Commit
The VA loan benefit is one of the most powerful financial tools available to veterans and using it with a lender who charges unnecessary fees and provides inaccurate information about how the program works can cost thousands of dollars that should have stayed in the veteran's pocket.
Keith Calabro is a military veteran and VA loan specialist who works with veterans to make sure they are getting the best possible terms on their VA home financing. If you are shopping for a VA loan and something a lender has told you does not feel right reach out to Keith Calabro for a second opinion before you commit to anything.
Sources
VA.gov MilitaryOneSource.mil ConsumerFinancialProtectionBureau.gov MortgageNewsDaily.com NAR.realtor
