Throughout my extensive experience working with Military families looking for homes in Maryland and Washington DC, I have spoken with many buyers who had obtained VA financing pre-approvals through online mortgage companies. Although I am sure that there are competent professionals working at some of these companies, my overwhelming experience has been that online lenders lack the professionalism, experience and knowledge to handle such an important transaction.
These companies choose deceptive names and internet addresses such as VALoanCenter.com, VALoans.com, VeteranLoanCenter.com and so on. They choose these names to boost search engine recognition, but also to appear affiliated with the government. Read on to find out how to choose a lender and how to spot red flags.
Although these online lenders provide inconspicuous disclaimers advising that they are not affiliated with the government, most of my clients in the Military were under the impression that these companies were, in fact, associated directly with the government.
The key to this deceptive practice is that many buyers are not aware that VA loans are a type of loan offered by many lenders, not specifically through a government entity. For instance, most large banks such as Wells Fargo and Bank of America offer VA loans, as well as most mortgage brokers.
Because real estate is local, I always suggest to my Military clients that they speak with a local, VA-approved lender to discuss their financing options. Every county in America has different rules, regulations, and guidelines regarding real estate transactions and financing. If you are looking to purchase in Maryland, a Maryland-based loan officer will have a much greater understanding of the rules and regulations that would apply to your transaction.
When I work with a client who has chosen to move forward with an online lender, I suggest that they speak with a local lender as a backup. Recently I was working with a member of the Air Force who had found his lender by Googling "VA Loans". He had spoken with the loan officer before meeting me, and though I suggested he speak with a local lender, he decided to continue with the internet lender because they had established a good rapport. Several weeks into the process, after my client found a home and negotiated a contract, he found that the loan officer was no longer returning his calls. After a frustrating few days with no communication, I eventually got a hold of the loan officer's manager. It turned out that the lender was not licensed to lend in Maryland! Once the loan officer made this discovery, he was so embarrassed that he began avoiding my client's calls. Fortunately, because my client had also spoken with a local lender when we first started looking at homes, the local lender was able to quickly step in and save the transaction. If not for the local lender, the buyer may have lost his $5,000 earnest money deposit for failing to comply with the financing clause in the contract.
Once you have chosen a trusted real estate agent or broker to help with your transaction, ask them for recommendations of lenders. If your agent has experience working with Military personnel, he or she will know local VA lenders with a proven track record of successful loan completions.