How to Avoid Getting Ripped Off on Your VA Loan

For seven years, I have been advocating for veterans and shouting about predatory practices in the mortgage industry. I wish I did not have to write articles like this, but too many lenders still take advantage of military families who trust them. Getting a VA mortgage should be an honorable, straightforward process, but it often becomes a minefield of hidden charges. If you are not carefully reviewing your loan documents, you could lose tens of thousands of dollars.

The Reality of Predatory VA Lender Fees

Just last week, a gentleman reached out to my team because he was about to close on a VA cash-out refinance. He asked if we could take a quick look at his paperwork to see if we could beat the offer. When I opened the loan estimate from his other lender, I almost had a heart attack. They were charging him an unbelievable $33,000 in lender fees to do a cash-out refinance and pull $24,000 of equity out of his home.

Think about that for a moment. This lender was charging him $33,000 in fees just to hand him $24,000 in cash. They were literally walking away with the value of a brand-new Mazda Miata just to process his transaction. This is the kind of ridiculous behavior that happens every single day, and it is why I am so passionate about educating consumers.

A Second Opinion Can Save Thousands

Fortunately, this story has a happy ending. I looked at the paperwork and immediately told him that we could beat this predatory offer. Jen Anderson on my team stepped in and locked his loan that very same day. We secured the exact same interest rate the other lender had quoted him, but our fee was only $1,500. By taking a few minutes to get a second opinion, this veteran saved over $31,500.

As one of the top VA lending teams in America, we have the experience to offer highly competitive rates without predatory markup. Sadly, many borrowers assume all lenders charge similar rates and fees, but this case proves just how massive the price discrepancies can be.

Watch Out for Cash Out Refinances

While predatory fees can show up on any mortgage, I consistently see the most outrageous behavior on VA cash-out refinances. Lenders know that borrowers seeking a cash-out refinance are often focused solely on the cash they will receive, making them less likely to scrutinize closing costs. They hide massive fees in the fine print, betting you will not notice your home equity is being drained.

If you are considering a cash-out refinance, protect yourself by shopping around. You can reach my team directly by calling or texting 786-933-2077. Because we close so many VA loans across the country, we see everything. If you share your loan estimate with us, we will review it for free. If it is a great deal, I will be the first to tell you to stay with your current lender.

Red Flags in Purchase Loans

While the most extreme price gouging usually happens with refinances, home buyers are not entirely safe either. On VA purchase loans, I rarely see fee differences as high as $30,000, but $10,000 to $20,000 discrepancies are incredibly common. Lenders will often use a buyer's lower credit score as an excuse to hike up fees, claiming they have no choice but to charge more.

Another trick we see involves builder or seller credits. If a seller offers you a credit to help cover closing costs, some lenders will magically inflate their own fees or create fake interest rate buy-downs to absorb that credit. Instead of the money helping you, it goes straight to the lender. It is a messy practice, and you need an experienced eye to spot these red flags on your loan estimate.

Do Not Trust the Advertising Hype

One of the biggest misconceptions in the mortgage industry is that big-name banks or heavily advertised lenders always offer the best deals. Many veterans assume that because they have a long-standing banking relationship with an institution, they are getting a loyalty discount. In reality, those massive advertising budgets are funded by charging higher fees to unsuspecting borrowers.

Similarly, you should never blindly trust your real estate agent when they claim their preferred lender is the cheapest. Realtors often have close professional relationships with specific lenders, but that does not guarantee you are getting a fair rate. Always request a loan estimate and send it to us at 786-933-2077. If the lender your realtor recommended actually has a great deal, we will happily tell you to reward them with your business. But if they are ripping you off, we can step in and save you money.

Getting Help Across the Country

Navigating the mortgage market can feel overwhelming, but you do not have to do it alone. My team is fully licensed and ready to assist you in almost every state across the nation. The only exceptions are Rhode Island and Utah, where I am not personally licensed. However, if you are looking to buy or refinance in either of those states, my very good friend Julie is a loan officer there who can review your loan estimate with the same level of honesty and integrity.

The Bottom Line

Whether you are purchasing your dream home or looking to tap into your equity with a refinance, you deserve a fair, transparent deal on your VA mortgage. Do not let predatory lenders steal your hard-earned equity through inflated fees and deceptive tactics. Get a second opinion by calling or texting us at 786-933-2077, and let us help you verify that you are getting the honest deal you earned through your service.