Penfed Mortgage Rates Very Low again

[Nords]

And here I was, all excited about my 30yr at 4.375 no cost refi.
I'll take my ball and go home

They just knocked another quarter-point off the refi costs because the loan amount is considered a low percentage of the home's value.

Now it's time to print/scan/e-mail the documentation from hell.

 

[kongmen]

Hello everyone this is my first post. I've been lurking for about 1 or 2 weeks great site! So many questions going through my mind but I guess I have to start somewhere.

Dw and I began getting aggressive on our mortgage 9/08. We owed 245k and as of today we owe 151k. We refied a year ago from a 30 year fixed @ 6.25% to a 15 year fixed @ 4.75%.

My question is with our aggressive ways (buying down the rate) would it be worth it to refi again at 3.75% no points 10 or 15 year fixed? We will pay all closing cost out of pocket.

We plan on staying in the home indefinitely. Both still w***ing although dw is drawing a pension (she started vary young now 50). Thanks for any replies.

 

[WanderALot]

My question is with our aggressive ways (buying down the rate) would it be worth it to refi again at 3.75% no points 10 or 15 year fixed? We will pay all closing cost out of pocket.

It's hard to say without exact numbers. By "aggressive ways", I assume you mean by aggressively paying down the mortgage (not "buying down the rate" which implies getting a lower interest rate by paying points).

There are several mortgage calculators you can use to figure out if the extra costs are worth it to refinance. Additionally, you might be interested in the PenFed 5/5 ARM which will give you pretty low rates at a pretty low cost. The rate is fixed for 5 years before it adjusts up, so if you have the cash flow, you can pay it down pretty aggressively before it adjusts.

 

[kongmen]

Yes I do mean aggressively paying down the mortgage every month. My way of understanding the numbers is if we are paying loads of principal each month we are in the end paying less interest over the life of the loan (same as lowering the interest rate).

I may look into one of those arms. I'm more of a traditionalist I guess have always been told to go fixed on mortgages. We hope to be able to pay it off within 2 or 3 years.

 

[brewer12345]

Yes I do mean aggressively paying down the mortgage every month. My way of understanding the numbers is if we are paying loads of principal each month we are in the end paying less interest over the life of the loan (same as lowering the interest rate).

I may look into one of those arms. I'm more of a traditionalist I guess have always been told to go fixed on mortgages. We hope to be able to pay it off within 2 or 3 years.

Kongmen, you can google the mortgage professor and use his excellent calculators to see what makes the most sense for you (the owner of the site is a professor emeritus of mortgage finance from Wharton), but based on my own modelling of mortgage refi scenarios it is highly unlikely that any standard mortgage refinance will make sense if you really intend to pay off your existing mortgage within 2 to 3 years. I am in somewhat similar straights, in that I am aggressively paying down my mortgage and expect to be one within 5 years. Like you, I always went for the scurity of a fixed note until last November when I did enough modelling to become comfortable with a refi from a 5% 15 year fixed to a 3.875% 5/5 ARM from Pen Fed. A year later with some lump sum paydowns and an aggressive monthly paydown, my modelling suggests that at best I would break even by refinancing even at rates a full percenage point below curent record low rates. So for me this is a source of comfort: its not going to make any difference by refinancing, so all I need to do is keep plodding along, try not to go insane, and kill the mortgage. I would not be surprised to find you are in the same boat.

BTW, you will find an, um, diversity of opinion on mortgage paydown on this site. I personally would like to congratulate you on the excellent progress you have made on paying down your note. It demonstrates very strong frugality and ability to sock it away. Kudos.

 

[kongmen]

brewer12345, thanks for the kudos. You know, that really does help. I've been working an INSANE amount of overtime but I think it will be worth it in the end even if I am giving back cheap money .

I don't know the details of your mortgage situation but I'm sure you are sacrificing as well so I want to CONGRATULATE you on your efforts as well.

 

[brewer12345]

brewer12345, thanks for the kudos. You know, that really does help. I've been working an INSANE amount of overtime but I think it will be worth it in the end even if I am giving back cheap money .

I don't know the details of your mortgage situation but I'm sure you are sacrificing as well so I want to CONGRATULATE you on your efforts as well.

Much appreciated. I would suggest that you think about what comes next. I can tell you from painful personal experience that killing yourself for a financial goal goes only so far, and then you generally hit the wall. For me, this lead to a revelation that I need to take better care of myself and try to achieve some balace. Whe the mortgage is paid off, then what? Important stuff, IMO. Way more important than rate and term.

 

[WanderALot]

How low can it go?!

PenFed's 5/5 ARM is now down to 3.5! I'm considering paying 0.5 points and refi-ing my existing 5/5 4.0 rate. If nothing else, it'll restart my 5 year clock.

I'm interested on how this will affect their previous rate floor of 3.75.

 

[FUEGO]

PenFed's 5/5 ARM is now down to 3.5! I'm considering paying 0.5 points and refi-ing my existing 5/5 4.0 rate. If nothing else, it'll restart my 5 year clock.

I'm interested on how this will affect their previous rate floor of 3.75.

Consider maybe buying it down another .125 by paying another .125 in discount points.

Is the 0.5 points for a rate reduction still valid?

 

[WanderALot]

Consider maybe buying it down another .125 by paying another .125 in discount points.

Is the 0.5 points for a rate reduction still valid?

Good idea on the buy down. Apparently the rate reduction for their ARMs is now 1pt (as of 10/14). Also, they've completely stopped the rate reductions on their fixed rate loans.

The cost for the ING Direct 2.99% loan and the PenFed rate reduction is now the same. The rate reduction is performed by paying the point and signing a simple form. I'm in the middle of changing jobs so it seems like the rate reduction would be much easier to do. Or, I could just wait and see if PenFed goes down a little bit closer to the ING rate. Lots to think about.

 

[FUEGO]

Good idea on the buy down. Apparently the rate reduction for their ARMs is now 1pt (as of 10/14). Also, they've completely stopped the rate reductions on their fixed rate loans.

The cost for the ING Direct 2.99% loan and the PenFed rate reduction is now the same. The rate reduction is performed by paying the point and signing a simple form. I'm in the middle of changing jobs so it seems like the rate reduction would be much easier to do. Or, I could just wait and see if PenFed goes down a little bit closer to the ING rate. Lots to think about.

I'm sitting still for the moment. Seeing if rates go down further. Still eyeing the Orange 5/1 mortgage at 3.125% with same closing costs as Easy Orange at 2.99%.

I also noticed the 5/5 ARM HELOCs are down to 3.88% right now.

 

[WanderALot]

I'm sitting still for the moment. Seeing if rates go down further. Still eyeing the Orange 5/1 mortgage at 3.125% with same closing costs as Easy Orange at 2.99%.

What's does the Orange 5/1 offer over the Easy Orange? The only differences I see is the balloon payment (which sounds like it can be quickly rolled into a new mortgage without closing costs) and the biweekly/monthly payments.

 

[FUEGO]

What's does the Orange 5/1 offer over the Easy Orange? The only differences I see is the balloon payment (which sounds like it can be quickly rolled into a new mortgage without closing costs) and the biweekly/monthly payments.

25 additional years to repay the loan is the key difference. And you know you won't be paying more than 2% more than the initial rate in year 6, then 2% more in year 7. Who knows, we may have 10% interest rates in 2015 when the Easy Orange is set for renewal, and you are subject to the mercy of the rates at that time (or just pay it off).

In my particular case, I could probably swing the Easy Orange at 1/8% less, just because I have a HELOC that won't charge me more than 6.25% in 5 years and I can put any remaining balance from the Easy Orange on the HELOC. Assuming I can subordinate the HELOC in a refi into an Easy Orange. I saw something at fatwallet I think that said you cannot have a HELOC on top of an Easy Orange?? I never looked into the Easy Orange any more though.

 

[JohnDoe]

I just noticed they have a 10 year fixed HE Term at 3.99 no closing costs. I think I will look into that.

 

[WanderALot]

25 additional years to repay the loan is the key difference. And you know you won't be paying more than 2% more than the initial rate in year 6, then 2% more in year 7. Who knows, we may have 10% interest rates in 2015 when the Easy Orange is set for renewal, and you are subject to the mercy of the rates at that time (or just pay it off).

Agreed, but I thought you, like me, were paying extra and intended to pay off the loan by the time 5 years were up. The Fuego I know wouldn't let something like a small outstanding balance prevent him from saving 1/8%

 

[Helen]

How easy is PenFed to deal with when taking out a new mortgage? I am on the west coast so the time difference can be a problem. I called the mortgage guy that was assigned to me on Thursday and left a message then called again on Friday and left a message.

I'm wondering if I can obtain a mortgage through them by early December.

Can anyone share their experience with me?

Thank you!

 

[brewer12345]

How easy is PenFed to deal with when taking out a new mortgage? I am on the west coast so the time difference can be a problem. I called the mortgage guy that was assigned to me on Thursday and left a message then called again on Friday and left a message.

I'm wondering if I can obtain a mortgage through them by early December.

Can anyone share their experience with me?

Thank you!

I refinanced with Pen Fed last Fall, taking out a 5/5 ARM. It took 6 or 8 weeks, but I was not champing at the bit to get it done quick and was in fact travelling for business a fair bit and was not around for part of the time. I did almost everything by email, speakin my loan officer maybe twice. They wanted an amazing amount of documentation, but that appears to be typical of the mortgage market these days. I was able to submit everything electronically via email and it in general was not a big deal.

The wild card is that I don't know what potentially high refinancing volumes might do to Pen Fed's processing times, so YMMV.

 

[FUEGO]

Agreed, but I thought you, like me, were paying extra and intended to pay off the loan by the time 5 years were up. The Fuego I know wouldn't let something like a small outstanding balance prevent him from saving 1/8%

I might be willing to pay the 1/8% as insurance to have an extra 25 years to repay "just in case" in general. But yes, you are right, I could take the $20-30k that would be left at the end of the 5 years and put it on my existing HELOC (assuming I could keep it by subordinating it to the new 1st position that the Easy Orange mortgage would hold). So essentially riskless for me in my position.

I'm still wondering whether up to $1000-$1400 is worth refi-ing for (if I hold 5 full years). Heck, if the market pops up 30% or so over the next couple years I may just sell a little bit of mutual funds and pay it off. Or take the wait and see approach and hope for even lower rates...

 

[Nords]

I'm wondering if I can obtain a mortgage through them by early December.
Can anyone share their experience with me?
Thank you!

I think you can, depending on how long it takes your appraiser. It'll take PenFed 30-60 days total but they'll lock your rate for the duration.

I applied Friday the 15th on their website (no phone calls). I got a confirmation e-mail the next day. On Wed 20th my answering machine lit up with calls (we weren't home) about an issue that confused them. They figured it out without my help and the final message was "Um, never mind."

On Thu the 21st they e-mailed me the name of my processor along with a bunch of papers to sign/return. They had the wrong interest rate and points on the paperwork. We e-mailed back & forth, they admitted their oversight, we straightened out the numbers, and that night I cranked up the scanner. They claim they can close by 29 Nov, but our mortgage is only about 40% of the home's appraised value. Our last refi was only about 20 months ago so they also claim the house is eligible for an "expedited appraisal", whatever that means.

Today (Sat 23 Oct) we got our paperwork from the local title company. I'll send that in Monday and then e-mail the PenFed processor (who still hasn't acknowledged receipt of my previous paperwork) that we've sent in the title company's paperwork.

When we did a PenFed HELOC in 2008 they had a bunch of strange notary instructions. Our Hawaii notary did what she always does, and the paperwork bounced right back at us. The second time I made her follow PenFed's instructions, while agreeing with her that it didn't conform to Hawaii state law and was pretty redundant/stupid besides, but the paperwork went through. Hopefully that won't be an issue this time.