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ING Direct offers 2.99% 5-year mortgage
Old 10-09-2010, 10:19 AM   #1
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ING Direct offers 2.99% 5-year mortgage

Just got an email this morning from ING Direct. They have a 2.99% rate on their Easy Orange loan and they rebate $1000 closing costs back on it. My 95K loan would cost about 1K after the rebate. This seems like a very good deal for those who intend to pay off the loan by the 5 year mark. It's been 6 months since my PenFed 5/5 4.0% refi and never thought that I could beat it by a percent!
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Old 10-09-2010, 11:14 AM   #2
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I filled out the form for a re-finance with a 25K/yr income - no debt.

I am curious how easy it would be for me to get a loan. I haven't worked since the middle of 2006 and haven't paid much in Fed taxes since.
Easy Orange

Rate:2.990%Payment:$210.53 bi-weeklyLoan Amount:$100,000.00Closing Costs:$2,477.19
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Old 10-09-2010, 08:59 PM   #3
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Quote:
Originally Posted by WanderALot View Post
Just got an email this morning from ING Direct. They have a 2.99% rate on their Easy Orange loan and they rebate $1000 closing costs back on it. My 95K loan would cost about 1K after the rebate. This seems like a very good deal for those who intend to pay off the loan by the 5 year mark. It's been 6 months since my PenFed 5/5 4.0% refi and never thought that I could beat it by a percent!
Darn! I just refinanced a few months ago at 4% for 5 years and paid one point for the privilege. I knew I should have procrastinated longer!
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Old 10-09-2010, 10:04 PM   #4
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Hmmm... time to refi the 3.75% penfed 5/5??
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Old 10-10-2010, 07:50 PM   #5
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Wanderalot,

I'm seriously considering the Orange refi. Did you call and verify whether the $1000 closing cost rebate is given regardless of your actual closing costs? Mine may be $1500-1600 and I'm curious if it is some deal like 50% of you actual closing costs up to $1000 rebate.

I noticed the origination fee is 0.5% or $500, whichever is greater. On sub-$100,000 amounts, that is $500.

Do you recall if the 5/5 Penfed loan requires repayment of any of the penfed-paid closing costs if the loan is repaid within a certain period of time? I skimmed through my penfed closing docs and didn't see anything to that effect. I know my penfed HELOC requires repayment of a small amount of closing fees ($130 IIRC), but can't find any info on the penfed 5/5 mortgage.

Looks like I could save a net of $1400 over the next five years, but I would have to either pay more than I am now each month, or pay off the balloon payment at year 5 (using the HELOC or savings, or something).
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Old 10-11-2010, 04:46 PM   #6
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WanderALot,
Thanks for the tip! I've been looking for a refi opportunity where I could roll my Home Equity loan and 1st together for lower rates than I already have. My rates now are 5% on the 1st and 4.26% on the 2nd. Even with closing costs, 2.99% will save me a bunch!
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Old 10-11-2010, 05:04 PM   #7
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I'm seriously considering the Orange refi. Did you call and verify whether the $1000 closing cost rebate is given regardless of your actual closing costs? Mine may be $1500-1600 and I'm curious if it is some deal like 50% of you actual closing costs up to $1000 rebate.
I just barely got done spreadsheeting everything, so I'm getting ready to call them and find out more info. My break-even time is about a year.

Quote:
Do you recall if the 5/5 Penfed loan requires repayment of any of the penfed-paid closing costs if the loan is repaid within a certain period of time? I skimmed through my penfed closing docs and didn't see anything to that effect. I know my penfed HELOC requires repayment of a small amount of closing fees ($130 IIRC), but can't find any info on the penfed 5/5 mortgage.
I don't believe the PenFed 5/5 had a prepayment clause. As far as I know, every HELOC has a closing fee clause if close within a short period. And, both HELOCs that I've had in the past were pretty explicit with this potential charge, so I'm assuming I'll be calling up PenFed to verify this.

Quote:
Looks like I could save a net of $1400 over the next five years, but I would have to either pay more than I am now each month, or pay off the balloon payment at year 5 (using the HELOC or savings, or something).
it looks like I would save about 3K before costs (over 5 years), so about 2K after costs provided I get 1K back as a rebate. Supposedly the loan is structured such that at the end of the 5 year term, you can easily "refi" (in quotes because I'm not sure it would be treated as a refi with escrow/closing costs etc) to the prevailing rate using their "Rate Renewal" feature:

Quote:
How many years do I have to pay off Easy Orange?
Easy Orange is a 5-year or 10-year fixed-rate mortgage with payments (principal & interest) based on a 30-year payback period. At the end of the fixed-rate period, your remaining balance will be due, but you can take advantage of the Rate Renewal feature, which gives you the opportunity to extend your fixed-rate period for an additional 5 or 10 years at our current Easy Orange rate if you qualify.
One more thing that might eat into your 'profit margin' is that if you have to subordinate your existing HELOC, you might have to pay a fee for that. Otherwise, the option is to close the HELOC ($130 as you said in your post) and then reopen it again after the mortgage closes. My last HELOC charged $250 for subordination, so I chose to close it since half the term of the HELOC had expired anyways. Luckily, I was able to find the good deal on the PenFed HELOC.
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Old 10-11-2010, 05:50 PM   #8
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Hang on a second. Are you guys all that comfy with a balloon payment requirement? I will have my mortgage entirely paid down within 5 years in my current plan, but a lot of things can go wrong and it can sometimes be really important to have options. I note that 5 year 5/1 ARMs seem to be available on ecery street corner at 3.25%, so you can buy yourself the option of extending for a very long repayment schedule at a pretty nominal cost over what ING is offering.
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Old 10-12-2010, 09:12 AM   #9
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One more thing that might eat into your 'profit margin' is that if you have to subordinate your existing HELOC, you might have to pay a fee for that. Otherwise, the option is to close the HELOC ($130 as you said in your post) and then reopen it again after the mortgage closes. My last HELOC charged $250 for subordination, so I chose to close it since half the term of the HELOC had expired anyways. Luckily, I was able to find the good deal on the PenFed HELOC.
Good point. I can trim 1/8 of a percent off the 5/5 penfed HELOC by closing/reopening and just paying the $130 (assuming they charge a subordination fee). I'll need to do some due diligence there.
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Old 10-12-2010, 09:26 AM   #10
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Hang on a second. Are you guys all that comfy with a balloon payment requirement? I will have my mortgage entirely paid down within 5 years in my current plan, but a lot of things can go wrong and it can sometimes be really important to have options. I note that 5 year 5/1 ARMs seem to be available on ecery street corner at 3.25%, so you can buy yourself the option of extending for a very long repayment schedule at a pretty nominal cost over what ING is offering.
I'm pretty comfy, since the balance is under $100,000. Additionally if I keep paying the $1100 a month that I have been paying for a few years, I'll be able to put the entire balloon payment on my existing HELOC and still have some available credit.

But I definitely know what you mean about the potential risk and losing your options. I am a little chicken to put myself on the line for a potentially largish balloon payment (if the $hit hit the fan). But I have found a solution along the lines of what you are proposing.

ING also has a regular 5/1 ARM that is 1/8% more than the Easy Orange mortgage, but has the benefit of a 30 year loan period. This would cost me $325 over the course of the 5 year period (versus the 2.99% easy orange mortgage), bringing my savings down to around $1000 vs the existing penfed 5/5 loan I have right now. However the savings could be quickly eroded in years 7, 8, 9, etc if rates go up and I do actually need to stretch the term of the loan.

I'm on the fence as to whether the $1000 savings is worth the risk down the road of paying more or the hassle of completing due diligence on the loan terms, new credit app, closing, insurance modification, subordination of the HELOC (with fees??), setting up new auto-pay at a new vendor, etc. And those savings only materialize if I hold the loan for 5 years (and don't pay off early or refi again).
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Old 10-12-2010, 01:03 PM   #11
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I took advantage of the 3.5% deal in June and called them today about getting my rate reduced. I was told that, once I have been a customer for 6 months, they will reduce my rate and extend my maturity (to 5 years from the reset date) for a fee equal to one month's p&i payment. I assume this deal would be open to any ING mortgagees.

Those who are concerned about the 5 year balloon may want to take advange of the rate reset to extend their maturity if the economics make sense.
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Old 11-26-2010, 03:27 PM   #12
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Thread update: Get $2000 off Easy Orange closing costs today through Sunday.

The Black Friday Sale – ING DIRECT USA

This means I pay zero closing costs. Looks like it sealed the deal for me and I'll be refinancing from my current 3.75% Adjustable on a 5/5 ARM to the Easy Orange at 2.99% for 5 years, then whatever their rates are in 5 years or refi elsewhere. If I still have a balance in 5 years.

I called penfed, and they will subordinate a HELOC for free. Sounds like a sweet deal!
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Old 11-26-2010, 06:24 PM   #13
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I have a HELOC from PenFed at 4.99%. This sounds like exactly what I need. What does "subordinate" mean?
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Old 11-26-2010, 06:36 PM   #14
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I just finished trying to apply online, but it wouldn't work.

31 minutes on the phone with ING fixed it, and the application is now complete (and approved!). Oddly enough, they asked to remove the interest and dividend income from my application so that they wouldn't have to verify it since we more than qualify without the div/int income.

The issue I was having was the loan amount plus existing HELOC cannot exceed 75% LTV total. They forced my loan amount down to meet this 75% LTV requirement. I had to call them up to get them to change the loan principal amount up, and they are making me close the Penfed HELOC to stay under the 75% total LTV requirement. But I can open up a new (lower rate) Penfed HELOC the day after I close with them if I want.

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I have a HELOC from PenFed at 4.99%. This sounds like exactly what I need. What does "subordinate" mean?
Subordinate means the HELOC creditor agrees to put his lien in 2nd place behind the first mortgage. When you refi a 1st mortgage, the HELOC would be in the first position, and the new refi'd 1st mortgage would be in 2nd position behind the HELOC in the absence of a subordination agreement.
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Old 11-26-2010, 07:50 PM   #15
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OK, I don't have a first mortgage. I got the HELOC to pay off the mortgage a couple years ago.

Edit: Apparently they don't refinance mortgages in Texas, so no luck for me.
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Old 11-26-2010, 10:13 PM   #16
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Well, Penfed 5 yr ARM Helocs are at 3.75% right now. No closing costs for most.
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Old 11-27-2010, 07:43 AM   #17
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Originally Posted by brewer12345 View Post
Hang on a second. Are you guys all that comfy with a balloon payment requirement? I will have my mortgage entirely paid down within 5 years in my current plan, but a lot of things can go wrong and it can sometimes be really important to have options. I note that 5 year 5/1 ARMs seem to be available on ecery street corner at 3.25%, so you can buy yourself the option of extending for a very long repayment schedule at a pretty nominal cost over what ING is offering.
+1

The difference is about $260/yr. If there is any risk related to a refi needed later, $260 * 5 = $1300 seem like a small price to get rid of that risk.
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Old 11-27-2010, 10:25 AM   #18
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+1

The difference is about $260/yr. If there is any risk related to a refi needed later, $260 * 5 = $1300 seem like a small price to get rid of that risk.
For some of us one this board, I think the amounts potentially remaining on a mortgage in 5 years will likely be a very small fraction of net worth and/or liquid assets at that time.

In addition, we can get Penfed HELOCs for 15 year terms right now or in a few years that would allow us to put any remaining Easy Orange balance on it if there is any balance remaining in 5 years.

So there is a little risk, but much less than $1800 worth in my case.
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