Anytime you are applying for a VA loan there are always concerns about disclosing your personal data, especially today when there is so much of a threat of identity theft. But some personal information is essential in the application process for a VA loan (or any loan, for that matter). While you shouldn’t be suspicious of some requests for information, there are some things that should not need to be provided. It’s always best to be aware of what is appropriate information to provide and what information should not be provided. You should also be aware of how that information is provided, whether on a form, over the phone, or unofficially.
Ironically, the reason this information is needed for a VA loan applicant is the same reason that causes most people to be skittish about giving it out. A VA loan lender needs to verify not only your identity but also your financial situation and history. If you know why a lender needs personal information, it becomes much easier to be confident in providing it to them. The first thing that your lender will need to process a VA loan application is your social security number. This is a unique identification number as a citizen of the United States and is one of the best ways to verify your identity. Regardless of the type of loan you’re applying for, you will most certainly be expected to provide your social security number very early in the process. Do not be affronted by this request.
Your social security number is required by the lender to prevent both identity theft and mistaken identity (there could easily be two John Smith’s). Requiring a social security number, and often a copy of your social security card, is a barrier to those who might try to open a loan in your name – they would have to have your social security number already in order to do so. In addition, when pulling a credit report on you, it probably would not be great if they accidentally pulled someone else’s with the same name. Having you provide a social security number is a way they ensure that they are pulling the correct person’s report. Specifically for VA loans, the social security number is also the main identifier in the records of the Department of Defense. The DoD uses the social security number to make sure the person’s information is used appropriately.
It is the lender’s responsibility to handle all credit information and obtain any necessary documentation and verification for the VA loan application. Part of that process is getting the social security number from the borrower. This is a non-negotiable part of the process and is essential in both identifying you as the borrower and protecting your identity. There is no need to be afraid of giving your social security number to a legitimate lender, and no reason to be suspicious of them asking for it. In addition to your social security number, you’ll also be asked for other personal and sensitive financial information.
It is not abnormal for a lender to ask for your bank information, such as your bank account number and routing number. However, there should always be a reason for doing so. Feel free to ask the lender why that information is required, and they should be able to provide a clear and compelling reason. If extra funds for energy efficient upgrades are being added into the loan, it may very well be that the lender needs your account information to deposit the funds into.
Also, be prepared to provide a fair amount of financial and tax documents. As part of employment and income verification, expect to provide w2 forms from at least the past year, and recent pay-stubs. You may be required to provide bank statements with some transaction information for the past year or several years. This is all normal. Be aware that some illegitimate lenders will pretend to offer outrageously good deals but actually be merely trying to get enough information to steal your identity. While this isn’t nearly as big of a problem with VA loans, since every lender who offers VA loans needs to be approved by the VA, it can still happen, and it’s best to always do your homework before applying for a VA loan with a lender.