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A lot has been posted on pros/cons/rants/raves about Penfed, but their interest only HELOC just seems too good to pass up, so thought I'd check and see what I'm missing....
We currently have an Equity Loan (6.99%) with PenFed and aside from the obvious recent decline in customer service (a lot to do with their major advertising lately / increase in new members), have been very happy with them.
We were going to refi to their 4.99 rate, when I came across the Interest Only HELOC and cant seem to think of any reason why we should NOT do it:
1) We can pay down the principal each month, even if it's an Interest Only loan without penalties
2) Rates go up each quarter, but even if it the rates double, or if loans freeze, with an Interest Only loan ($250/month minimum), we can afford the increase in payments. Of course the plan will be to quickly lock in a rate with a new Equity Loan (lucky to have enough equity to do both) if the rates don't make sense anymore.
Anything obvious that I'm missing? We are very conservative and don't expect to have a balance unless the rate continues to be better than our other investment options. But...because we are very conservative, we have never done an ARM...
Thanks for the help with the sanity check!
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