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Pentagon Federal Credit Union (Penfed) 5/5 Adjustable Rate Mortgage Dropped to 2.625%, No Closing Costs

Rokket 4,484 12,765 November 15, 2013 at 09:19 AM in Finance (9)
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Last Edited by DeividdoSama November 17, 2013 at 09:22 AM
Hi! PenFed's now offering a super low 5/5 ARM rate of just 2.625%, with no closing costs. (There are a few exclusions, such as rental properties.) Just try to beat that! look around

Link: https://www.penfed.org/

Edit: I think the rate *just* dropped, because only the home page shows the 2.625% rate. The ARM page still shows the 2.75% rate.

This is a totally slick deal, I think; hope this helps someone who's looking to buy or refinance a house! Yes, very good - excellent credit is needed.
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Last Edited by sam_ay February 12, 2014 at 01:00 PM
As of 02/12/14, the rate has decreased to 2.75%

As of 12/19/13, the rate has now increased to 2.875%

¹5/5 Adjustable Rate Mortgage (ARM) Closing Cost Promotion: Offer available for purchases or external refinances only. PenFed will pay your closing costs including but not limited to: appraisal fee, tax service fee, CLO access fee, title fees, transfer tax fees, credit report fee, flood cert fee, recording fee, survey if required and work verification fee. This does not include: escrow, interest, homeowner's insurance or owner's title insurance, or the cost for a structural engineering or similar report, should the appraiser request one, or points to buy a rate down or applied to a loan. Points are the responsibility of the borrower and not covered in promotions. Builder or seller credits may reduce the amount of the closing cost credits. See restrictions below for existing PenFed mortgage borrowers. Promotion is not available for investment properties. Other restrictions also apply. You must use one of our preferred title companies to get the closing cost credits. For New York properties, borrowers are required to pay title insurance premiums and may use any title company to obtain the closing cost credit. For Limited Cash Out refinances, limitations on the amount of cash back at closing may require that all or a portion of the credits be applied toward principal reduction. Note the reimbursement of closing costs below.

Reimbursement of Closing Costs: If you pay this loan off and close the account earlier than the 36-month anniversary date of the loan closing, you will be obligated to pay PenFed a prorated amount of the closing cost credit received from PenFed. This amount will be added to any loan payoff amount requested prior to the 36 month anniversary date. The reimbursement amount will be prorated in equal amounts on a monthly basis. Closing costs credit to be reimbursed include all closing costs paid by PenFed.

Internal PenFed Loan Refinances: Borrowers with an existing 5/5 ARM PenFed mortgage may qualify to do a rate modification for a 1% fee of the loan payoff amount. Borrowers with existing PenFed Mortgages may also become eligible to refinance if the following criteria is met.
1. New loan amount must be $50K over payoff on a conforming loan and $100K over payoff on a jumbo or super jumbo loan.
2. The new loan amount must meet PenFed's LTV guidelines.
3. Borrower is also responsible for paying all closing costs.

Investment properties not eligible for offers.

Conforming Mortgages: For loan amounts from $25,000 to $417,000. The maximum combined loan- to-value (CLTV) is 95%; 80% LTV and above are subject to private mortgage insurance (PMI). The maximum LTV and CLTV for condominiums is 80%.

Jumbo Mortgages: For loan amounts above $417,000 to $750,000. The maximum loan-to-value (LTV) is 80% and the maximum combined loan-to-value (CLTV) is 90%. The maximum LTV and CLTV for condominiums is 80%.

Super Jumbo Mortgages: For loan amounts above $750,000. 5/5 ARMs up to $4 million and Fixed Loans up to $2 million. The maximum loan-to-value (LTV) and combined loan-to-value (CLTV) is 80%. The maximum LTV and CLTV for condominiums is 70%.

5/5 ARMs – Offers available for purchases or external refinances only. The initial rate can change every 5 years by no more than 2 percentage points up or down, never to exceed 5 percentage points above the initial rate. When the rate adjusts, your new rate will be the then current index plus margin, which is currently set to 2.00 for the new products, as long as it does not exceed the 2% adjustment cap.

All Mortgage Programs: The application of points will be determined by the loan-to- value (LTV) ratio combined with certain representative credit scores. Points also apply to certain cash-out refinance transactions, certain condominium transactions, and some transactions with subordinate financing.
Origination fees may apply to certain programs. The origination fee may be waived by adding a 0.25% to the selected rate.

*** For purchase transaction, the rate cannot be locked until PenFed has received a signed ratified contract.

The applicant is responsible for the following fees and costs at the time of closing (except 5/5 ARM): Origination fee (waived for 5/5 ARM loan program), appraisal fee, tax service fee, CLO access fee, title fees, transfer tax fees, credit report fee, flood cert fee, recording fee, survey if required and work verification fee, escrow reserves and interest due until first payment, other cost may be included due to program specific circumstances. This is not intended to be an all-inclusive list.

Escrows will only be waived if LTV is 80% or less in CA, OR, DC, VT & NY; 75% in all other states.

Borrowers are required to have sufficient reserve assets available to cover 6 months full payments including principal, interest, homeowner's insurance, property taxes and homeowner associated dues and/or mortgage insurance, if applicable. For non-primary residences, we require 12 months of reserve assets.

If a loan is withdrawn, the applicant may not reapply for at least 90 days from the date the application was withdrawn.

All above disclosures apply to non-Veteran's Administration (VA) loans. VA loans have different guidelines and eligibility requirements.

All rates and offers are as of November 2013 and are subject to change without notice. Restrictions apply to existing PenFed mortgage borrowers. Other restrictions may apply. To receive any advertised product you must become a member of PenFed by opening a share (savings) account. Federally insured by the NCUA.
We do business in accordance with the Federal Fair Housing Law and the Equal Credit Opportunity Act.


Having been selling mortgages for 10+ years, this is a smokin' deal that I would do on my own house. Think about it like this. The worst case scenario is that you have an average of a 3.625% rate for 10 years (2.625% for 5 and 4.625% for 5) If you invest the savings in the first 5 years, you can actually realize a bit more benefit. 5/5 ARMS are NOT COMMON. Most ARMS are 5/1 or even 5/6 (adjust every 6 months). Statistically unless you are of retirement age you will move every 5-7 years. If 100 of you got the mortgage, about 15 of you would make it through year 10.

Vertex42 has an awesome Excel worksheet [vertex42.com] to help you compare the ARM 5/5 to other mortgages. Enjoy!

Other possible spreadsheets from here [vertex42.com].

1,252 Comments

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#3
damn, just closed on a house 2 weeks ago !!! wish this would have came around then
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#4
Not that slick.

2.625% for the first 60 months

3.375% for the next 300 months

TERMS:

The information provided assumes the purpose of the loan is to purchase a property, with a loan amount of $100,000 and an estimated property value of $125,000. The property is located in Alexandria, VA and is within Fairfax county. The property is an existing single family home and will be used as a primary residence. An escrow (impound) account is required. The rate lock period is 60 days and the assumed credit score is 740.

At a 2.625% initial interest rate, the APR for this loan type is 3.162%, subject to increase. Based on current market conditions, the monthly payment schedule would be:

- 60 payments of $401.65 at an interest rate of 2.625%
- 299 payments of $436.09 at an interest rate of 3.375%
- 1 payment of $435.65 at an interest rate of 3.375%

If an escrow account is required or requested, the actual monthly payment will also include amounts for real estate taxes and homeowner's insurance premiums.
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Last edited by peterstevens November 15, 2013 at 09:49 AM
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#5
Quote from peterstevens View Post :
Not that slick.

2.625% for the first 60 months

3.375% for the next 300 months

TERMS:

The information provided assumes the purpose of the loan is to purchase a property, with a loan amount of $100,000 and an estimated property value of $125,000. The property is located in Alexandria, VA and is within Fairfax county. The property is an existing single family home and will be used as a primary residence. An escrow (impound) account is required. The rate lock period is 60 days and the assumed credit score is 740.

At a 2.625% initial interest rate, the APR for this loan type is 3.162%, subject to increase. Based on current market conditions, the monthly payment schedule would be:

- 60 payments of $401.65 at an interest rate of 2.625%
- 299 payments of $436.09 at an interest rate of 3.375%
- 1 payment of $435.65 at an interest rate of 3.375%

If an escrow account is required or requested, the actual monthly payment will also include amounts for real estate taxes and homeowner's insurance premiums.
I don't understand why you say this isn't a slick deal. Yes, the rate is fixed for 5 years, then adjusts once per 5 years, maximum 2% increase. No offense, but I think perhaps you haven't been shopping around for mortgages lately. I challenge you - in the nicest possible way - to find a better rate on a 5/5 ARM mortgage with no closing costs.
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Last edited by Rokket November 15, 2013 at 10:18 AM
#6
People are entitled to their opinions. Trying to bash the idea that this is a great deal in tho everyone's heads will only result in more negative reactions...
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#7
As a total aside, it amazes me that people are all about saving $10 on a purchase, yet deals such as this - which potentially saves thousands of dollars - go unnoticed. Yes, I imagine I'll get more thumbs down now. Sigh.

Quote from vip00 View Post :
People are entitled to their opinions. Trying to bash the idea that this is a great deal in tho everyone's heads will only result in more negative reactions...
Yes, I totally understand. Thanks for being polite in your critique!
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Last edited by Rokket November 15, 2013 at 10:03 AM
#8
my rate is 4.375 so this would be paradise, even at the 3%...pretty good.
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#9
Edit -- nvm


5/5 is a good option. I dont like the 5/1 loans though.
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Last edited by JackD121 November 15, 2013 at 10:18 AM

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#10
"The rate lock period is 60 days and the assumed credit score is 740." that would be nice. my current rate is 3.7something% and my payments are about $550. maybe in 15-20 years i can refinance with a 740 credit score.. TU out of jealousy
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#11
Quote from peterstevens View Post :
Not that slick.

2.625% for the first 60 months

3.375% for the next 300 months

TERMS:

The information provided assumes the purpose of the loan is to purchase a property, with a loan amount of $100,000 and an estimated property value of $125,000. The property is located in Alexandria, VA and is within Fairfax county. The property is an existing single family home and will be used as a primary residence. An escrow (impound) account is required. The rate lock period is 60 days and the assumed credit score is 740.

At a 2.625% initial interest rate, the APR for this loan type is 3.162%, subject to increase. Based on current market conditions, the monthly payment schedule would be:

- 60 payments of $401.65 at an interest rate of 2.625%
- 299 payments of $436.09 at an interest rate of 3.375%
- 1 payment of $435.65 at an interest rate of 3.375%

If an escrow account is required or requested, the actual monthly payment will also include amounts for real estate taxes and homeowner's insurance premiums.
You need to learn more about how ARM's work. It all depends how long you plan to keep the property/mortgage. If you compare it to a 30 year fixed at 4.25%, the 5/5 ARM will be cheaper if you keep the mortgage for 14 years or less even under the worst case scenario. This is a very slick deal.

Quote from JackD121 View Post :
I for one think this is a great deal. Too bad my house won't be ready till May so i cant jump on this. The max the rate can go in 30 yr term is 4.62% which is very comparate to conventional 30 yr.

5/5 is a good option. I dont like the 5/1 loans though.
This is not correct. The max is 7.625%. It is a max adjustment of 2% every 5 years, and a lifetime max of 5%.
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Last edited by chukdotcom November 15, 2013 at 10:13 AM
#12
I have 5% fixed now, could this be used for re-financing? is it worth it?
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#13
Quote from eIplbe View Post :
I have 5% fixed now, could this be used for re-financing? is it worth it?
Yes it could. But I would NOT get an ARM if you are planning on keeping the mortgage for 30 years.
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#14
Quote from chukdotcom View Post :
You need to learn more about how ARM's work. It all depends how long you plan to keep the property/mortgage. If you compare it to a 30 year fixed at 4.25%, the 5/5 ARM will be cheaper if you keep the mortgage for 14 years or less even under the worst case scenario. This is a very slick deal.



This is not correct. The max is 7.625%. It is a max adjustment of 2% every 5 years, and a lifetime max of 5%.
My bad .. I read it wrong. Thanks for clarifying
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#15
i am 4.25 30 year fixed now.

There seems to be an early payment penalty if you pay off before 3 years.

If my math works out, this could save me 300-400 a month.

ARMs are scary products but this seems awesome.
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