4.99% PenFed Home Equity Loan

[calmloki]

Need to start collecting a promotional fee from PenFed - keep singing it's praises to creditworthy citizens. Just got credit approved for a 4.99% home loan from them that should save us about $1285/year in interest and consolidate our two property loans, saving .5% and 16 years on one and saving .75% on the other, which was interest only and set to adjust it's rate and terms 10/2009. Our payments will be $481 more per month, but we can keep the cash working that we had earmarked to payoff the ARM. O, BTW, it's working at 6.25% in PenFed CDs. How do they do it? (volume, yeah, that's it....)

 

[flipstress]

Thank you, everyone on this thread.

Yeah, thanks everyone! My current mortgage interest rate is 5.5% not 5.25%, so it's even more savings for me than I thought. I got approved, too.

Will follow calmloki's suggestion and forward the info to some friends who might be in need of lowering their mortgage rates.

 

[calmloki]

Timing/progress update

Applied online for the PenFed 4.99% refinance on Saturday 12/29. A single unique PenFed employee has been in regular telephone contact with me since Monday 12/31. This morning, 1/3, she called again and we are in pre-close status with papers being FedExed for signing and closing 1/7. She is set to disburse funds in an efficient and simple (for me) way to our two loans. To say that i'm pleased with PenFed's service on this loan is an understatement.

Let me use a superlative: PenFed's 4.99% loan program seems to be as good as their CDs or their credit card.

 

[Spanky]

Has anyone taken a HEL at 4.99% and use the proceeds to invest? It seems too good to be true.

 

[JohnEyles]

Wonder if they're gonna come out with their usual
killer CD deal in January ?? Or maybe October '07's
6% APY was it.

 

[A854321]

I'm beginning to wonder if the Feds will drop the Prime again and a lock in at 4.99% won't be the best deal around.

 

[OAG]

PENFED's 5.25% 7 Year APY CD which they put up a couple of weeks ago is about it, rate wise, I fear for this year. All the others that I track LOWERED their rates below 5% recently. If the FED (which after today they may be forced to) lowers the rate another .5% I doubt we will be seeing anything near 6% for FDIC/NCUA CD's for a long time. My HELOC rate, which I do not use ("emergency funds"), was lowered to 6.75% from 7.25% this month and I suspect it will be dropping again next quarter.

 

[clifp]

Best rates I have seen is Key Direct 5.50 for 7-9 years 5.70% for 10 years.
Unfortunately, they dropped their 5 years rate from 5.3 to 5.0%.

I was going to put a chunk of my $100K Pen Fed loan (loan is being approved) into the long CD but with stocks on sale this year probably won't bother.

I am also impressed with Pen Fed's service

 

[JPatrick]

Holding out for sub-4.99 on the HELOC

 

[Spanky]

Best rates I have seen is Key Direct 5.50 for 7-9 years 5.70% for 10 years.
Unfortunately, they dropped their 5 years rate from 5.3 to 5.0%.

I was going to put a chunk of my $100K Pen Fed loan (loan is being approved) into the long CD but with stocks on sale this year probably won't bother.

I am also impressed with Pen Fed's service

Does that mean that you are planning to put the $100K into equity?

 

[clifp]

Yup pretty much, stock seem to be getting cheaper almost daily. There are six or 7 stocks with yields ranging from the high 5% to 12% that I want to buy or increase my positions. Even if a couple cut their divdend I figure I'lll I'll come out ahead over a 10 year period. I've also toyed with Vanguard High Yield fund.

 

[JohnDoe]

Holding out for sub-4.99 on the HELOC

Me too.

 

[utrecht]

Can you use this HELOC to refinance your entire mortgage? Isnt a HELOC limited to a percentage of your equity?

 

[JohnDoe]

OWNER OCCUPIED HOME -
80% OR LESS LOAN TO VALUE (LTV) Borrow $10,000 - $400,000

 

[Den26]

I just closed on my HEL (NOT HELOC). Everything went as smooth as can be. PenFed seems to be an excellent credit union to deal with. 15 days from application on-line, to closing. I'm impressed. Didn't even have to leave home to sign papers.

 

[utrecht]

OWNER OCCUPIED HOME -
80% OR LESS LOAN TO VALUE (LTV) Borrow $10,000 - $400,000

OK, so do you have to get an appraisal? That means I can borrow 80% of my houses value? Regardless fo my equity? Is this all done over the internet?

 

[OAG]

They look at the on-line information in the County you live in. At least that is what they did for my HELOC.

 

[GatorBuzz]

That means I can borrow 80% of my houses value? Regardless fo my equity?

Is that correct? I thought you could only borrow up to the amount of equity in your house...

 

[SecondCor521]

Is that correct? I thought you could only borrow up to the amount of equity in your house...

The 80% LTV numbers that PenFed cites includes your first mortgage balance (if any) as well. You can borrow more than 80% LTV from PenFed, and you can borrow it for longer terms, but in both cases you won't get the 4.99% rate.

I considered this deal but have decided to pass it up. In my case I have 29 years left on a 30 year fixed at 5.75% that started out at 80% LTV. If I borrow enough to make it worth it, my cash flow becomes constrained, and most of the benefit I receive is simply from accelerating the paydown on my mortgage balance(s), not from the lower interest rate. I did a spreadsheet that indicated that for me, refinancing part of my mortgage into this HEL was equivalent to about a 4.7% tax free yield, which wasn't enough to compensate me for the perceived risk associated with the higher cash flow requirements.

2Cor521

 

[JDARNELL]

I went back and looked at this thread which was started last Dec. At the time PenFed was doing the 4.99% Home Equity Loan. I considered doing it but was waiting til a couple of things lined up before I pulled the trigger. I had floated about $75K on credit cards at 0% making about $4K in interest but I figured my FICO was low so I waited.

When I was ready to pull the trigger the rate had went back up to 5.25%. Not a big difference but I decided to wait. This past week I pulled the trigger and took about 45% of what I owe on the first mortgage. It took about 10 min and within 2 hrs I got an email asking me where I wanted the money sent and that the closing documents were on the way. Painless process so far.

So here is the plan. I am eligible to retire in about 25 months from the military. I intend to pay all this on the first mortgage and will be able to have the remaining first mortgage balance paid off in 25 months. I will now have a much smaller payment going forward once I retire. So for me this is a way to reduce cash flow needs and give me a little more flexibility at a smoking fixed rate.

Tomcat98

 

[OAG]

Tomcat: Be careful with the PENFED Loan. The 0 closing costs are 0 as long as you do not close (payoff the loan) in less than 24 months. If you do they will charge you for the closing costs. No big deal if this is the case just keep it open for 24 months. That clause may not apply to yours, but be sure to read the documentation closely.

 

[JDARNELL]

Thanks. I noticed that and will keep an eye on it.

Tomcat98

 

[FUEGO]

I did this deal, and I was surprised the "closing costs" were only $124. So I may have to repay that if I pay off the loan early. I guess when the bank is paying closing costs, they'll find a way to make them as low as possible.