Penfed Mortgage Rates Very Low again

[FUEGO]

In case you don't already have enough spam in your inbox, I'm here to help shill Penfed. Their rates on the 5/5 Adjustable Rate Mortgage are down to 3.75% with no points and no origination fee. You can buy it down further to 3.625% or 3.5% for .25 and 0.625 points, respectively.

In the past many closing costs were paid by Penfed. I don't see that listed on their web site right now specifically, but when you click "apply" the first page discusses "low closing costs". I paid $400-500 for my recent refinance with this product. Call to verify what they are offering. Either way, a pretty good deal.

I have this mortgage right now, and it should work very well for FIRE-seekers who are paying off their mortgage in the next 5 to 10 years. The rate adjusts up to 2% above the initial rate after five years.

You can do the math on it yourself, but this will likely beat many fixed rate mortgages over a 10 year period.

https://www.penfed.org/productsAndRates/mortgages/mortgageRatesListing.asp

 

[brewer12345]

Every time I think I am done refinancing...

 

[FUEGO]

Every time I think I am done refinancing...

Just think, if this "deflation" thing ever takes shape like the doomsayers here constantly talk about (when they aren't talking about inflation), then we may be refinancing into 1% mortgages in a few years.

 

[brewer12345]

If it takes shape in a few years I will not have a mortgage to refinance any more.

 

[ziggy29]

Just think, if this "deflation" thing ever takes shape like the doomsayers here constantly talk about (when they aren't talking about inflation), then we may be refinancing into 1% mortgages in a few years.

Which they will need to pay for the food, energy and health care inflation that far exceeds the stated inflation rate.

 

[oilspill]

"Deflation" is a smokescreen thrown up so the Federal Govt can print trillions to inflate its way out of its debt.

 

[jblack]

15 yr fixed is 3.875 as well....but with 1% origination. i think when it hits 3.75 i'll have to pull the trigger and refinance yet again. boo hoo.

 

[Nords]

Every time I think I am done refinancing...

Same here. This would be our ninth between two homes over the last decade.

I wonder if the Fed's recent announcement about buying more bonds is causing mortgage rates to sag even further. Our local low-interest-mortgage bank has been offering a 30-year fixed 4% for two points. This week it's down to 1.75 points. I'm not sure they're appreciative of the lessons their potential future customers are learning from this rate watch, but we're probably going to pull the trigger in September along with a million other mortgage owners.

 

[JohnDoe]

I refi'd about 18 months ago 15 years at 4.5%. My balance is now under 100k so I don't think I'll save too much by any more refi's. Definitely nothing that charges a 1% origination fee.

 

[saluki9]

Every time I think I am done refinancing...

I know... Just pulled the trigger on 4.375 no cost for 30 years.

 

[brewer12345]

I know... Just pulled the trigger on 4.375 no cost for 30 years.

Actually, with a 123k mortgage at 3.875% that I am aggressively paying down, I may really be done refinancing. The marginal benefit is getting pretty skinny. I think that rates would have to go to 3% or less on my 5/5 or it to be worth another refi.

 

[WanderALot]

I refi'd about 18 months ago 15 years at 4.5%. My balance is now under 100k so I don't think I'll save too much by any more refi's. Definitely nothing that charges a 1% origination fee.

I refi'd to PenFed's 5/5 ARM about 4 months back and they didn't charge a origination fee. They stopped charging the 1% about 6-8 months I think.

Also, if PenFed still owns your loan then they'll only charge you 0.5% to modify the loan to the new rate. I have approx the same size loan at 4% and I'm making extra payments to pay it off in about 5 years. It doesn't make sense in my case since I would only save about 400 in interest over the 5 years when I take into account the 0.5% fee.

 

[saluki9]

Actually, with a 123k mortgage at 3.875% that I am aggressively paying down, I may really be done refinancing. The marginal benefit is getting pretty skinny. I think that rates would have to go to 3% or less on my 5/5 or it to be worth another refi.

I'd happily give up my great rate for a 123k principal balance. Might consider a limb too

 

[jblack]

Also, if PenFed still owns your loan then they'll only charge you 0.5% to modify the loan to the new rate. I have approx the same size loan at 4% and I'm making extra payments to pay it off in about 5 years. It doesn't make sense in my case since I would only save about 400 in interest over the 5 years when I take into account the 0.5% fee.

I know I should just call in and ask, but does anyone know if this deal is just for the 5/5 ARM or if it also applies to fixed mortgages @ PenFed, too?

 

[dgoldenz]

Good time to buy or re-fi....4.375% 30-year fixed is incredible. There's no way rates will stay this low in the long run.

 

[HawkeyeNFO]

I just called to get on the list for reducing my rate. Currently I'm on a 5/5 at 4.125%, looking to pay the .5% fee to reduce it to 3.75%. My balance is about $300K, so the fee will be $1500, giving me a break even point in 25 months.

Here's how it works:

1- Call their mortgage servicing at 800-585-9055, and tell them you are interested. Then you are on the list using today's rate, and they will call you back. He told me right now it takes about 3 weeks.

2- If the rate goes up, no worries, you get the rate of the day you called. If it goes down, call them again for the lower rate. No additional fee, and you keep your place in "line."

3- When they call back, if you are still interested, they'll send you some paperwork and you send it back. He said no notary would be required.

4- Rate is now lower, and when it adjusts, it is from your new rate. For example, when mine adjusts, the most it can go up is to 5.75%.

I can't say enough good things about PenFed!

 

[harley]

I haven't looked into this yet, and I'm not (yet) a PenFed member, but this conversation is making me think about refinancing again. I'm curious though. We are retired, with no pension, no real income other than dividends and interest. We have plenty of money as far being able to pay off the mortgage at any time. But I'm wondering if we're going to be able to qualify again, in these new days of actually doing means testing. If I can get a 4.375% loan that's .5% better than what I currently have. About $120/month. It's real money, but I'd hate to have to jump through too many hoops (sorry Sarah ).

Another thing I'd like peoples opinion on. I can balance a checkbook, but I'm not a mathematician or anything. I'm trying to figure out at what point and level a mortgage is worth it to us. I'm carrying one because our house is pretty expensive even now, and having it 100% paid off is leaving a good chunk of money in non-liquid form. Also, having the mortgage deduction has helped keep us down in the 15% tax bracket last year, and probably for the next few years too, which will help with the Roth conversions.

So what I want to do is figure out how much the mortgage is costing us vs. how much it is saving us, and how much mortage is the sweet spot. I know I need to compare how much we get as a deduction vs. how much we are paying in interest, and I think I also need to consider how much we would be paying into the 25% bracket if we didn't have the deduction. I guess I also have to subtract out how much we are making in interest on the amount of the mortgage (negligible). Has anyone ever worked all this out, or (please, God) know of a site or calculator that will walk me through it? I'm keeping the mortgage under $400K so I can stay qualified for the best rates, and wouldn't mind decreasing it to cut down on what I have to come up with every year to pay it. Like I said, I'm looking for the sweet spot. If I can find it, it might make it worthwhile to go through the hassle of refinancing. Any ideas/help?

 

[REWahoo]

So what I want to do is figure out how much the mortgage is costing us vs. how much it is saving us, and how much mortage is the sweet spot. I know I need to compare how much we get as a deduction vs. how much we are paying in interest, and I think I also need to consider how much we would be paying into the 25% bracket if we didn't have the deduction. I guess I also have to subtract out how much we are making in interest on the amount of the mortgage (negligible). Has anyone ever worked all this out, or (please, God) know of a site or calculator that will walk me through it? I'm keeping the mortgage under $400K so I can stay qualified for the best rates, and wouldn't mind decreasing it to cut down on what I have to come up with every year to pay it. Like I said, I'm looking for the sweet spot. If I can find it, it might make it worthwhile to go through the hassle of refinancing. Any ideas/help?

Harley, do a forum search on "pay off the mortgage early?" and I'm betting you'll find TONS of help.

 

[Carnage]

Any online calculators that anyone would recommend for the "To re-fi or not to re-fi" question?

 

[REWahoo]

A Google search reveals dozens of calculators to determine the interest savings but I don't think I've ever seen one that attempts to also include the tax deduction and potential investment gain aspects. The variables probably make it too complex to easily quantify - which is also the reason there is no consensus on this forum as to the wisdom/folly of early mortgage payoff.

 

[Carnage]

A Google search reveals dozens of calculators to determine the interest savings but I don't think I've ever seen one that attempts to also include the tax deduction and potential investment gain aspects. The variables probably make it too complex to easily quantify - which is also the reason there is no consensus on this forum as to the wisdom/folly of early mortgage payoff.

Yes, thanks, I agree, none of them quite had what I was looking for, was hoping someone had a silver bullet. So I unfortunately have to fall back on my own math. A horrid tool if there ever was one.

 

[harley]

Harley, do a forum search on "pay off the mortgage early?" and I'm betting you'll find TONS of help.

I've been reading them, and yes, there is TONS of something, but I'm not sure it's help. Mostly it's the eternal mortgage or no mortgage argument. I don't see much about fine tuning the mortgage.

Yes, thanks, I agree, none of them quite had what I was looking for, was hoping someone had a silver bullet. So I unfortunately have to fall back on my own math. A horrid tool if there ever was one.

Same here. I guess re-doing my taxes using different mortgage deductions would help, as well as tracking the other items I mentioned. This may be more work than it's worth. Where's my dartboard...

 

[REWahoo]

This may be more work than it's worth. Where's my dartboard...

I suspect that's one of the reasons so many of the mortgage do/don't payoff early debates boil down to "do whatever makes you feel good/sleep at night". There is more to the decision than just numbers - which I know is hard.

 

[HawkeyeNFO]

PenFed 5/5 is up to 4% today. Man, did I time this right!

 

[tmm99]

Read This Before You Refinance Your House

I am not saying we should do as this guy says, but it is interesting to me that he wrote this artice 1.5 years ago...

Realtors always warn you “You’d better act now before rates go up.”
You might think they’re right… After all, mortgage rates are the lowest they’ve been since the Fed started keeping records in 1971. But interest rates could go much lower.
America’s problems came to a head in 2007. Since then, the Fed has cut interest rates from over 5% to near zero. As I’ve written before, it looks a lot like Japan…
In the 1980s, Japan had an overlending bubble similar to ours today… Its bubble peaked in 1990. Japan’s version of the Fed cut rates from above 5% to below 1% – and it’s held them there ever since!