Now that you’ve closed on your home, your real estate transaction is a matter of public record. This means other mortgage companies can and often will access your information and send you refinance and credit offers.
Some may be reputable advertisements from legitimate companies. But many others won’t be. These shady offers may even feature imitation insignias and fake logos meant to look like official correspondence from the VA or other government agencies.
You’ll often see rock-bottom interest rates and terms that promise significant savings. No matter how tempting these offers seem, please remember: If it looks too good to be true, it probably is.
Lenders who aggressively (and sometimes illegally) solicit adjustable rate mortgages and other too-good-to-be-true refinance offers don’t have your best interests at heart. Some hide or obscure the relatively short time you get to enjoy that low interest rate before it can skyrocket and send your payments soaring.
Other offers may include steep closing costs and fees that lenders stuff into your overall loan balance. Low introductory interest rates help mask the fact that your mortgage balance has ballooned to cover costs and fees. You could even wind up owing more than your home is worth after one of these shady refinance loans.
Here are some things to keep in mind:
- Be wary of mortgage and credit offers that seem to imply a government affiliation by using official-looking logos, insignias and titles. The VA and other governmental agencies don’t make home loans or advertise them.
- Be wary of incredibly low interest rates. Always check the fine print, as these rates tend to last only a short time before increasing, sometimes significantly. Also, these rates don’t usually reflect the Annual Percentage Rate (APR) on the loan, which can be a better reflection of the total cost of borrowing.
- Be wary of anything that sounds like a guarantee. Loan preapproval is not the same thing as loan approval.
The best thing to do when you receive an offer like this is simply throw it away. Better yet, you can opt out of receiving them entirely. Visit the Federal Trade Commission’s website to learn more about managing prescreened credit and insurance offers.
In addition, you can always call your loan officer with questions about a refinance offer you’ve received. They can help you separate fact from fiction and determine whether a refinance might be in your best financial interest.