4.99% PenFed Home Equity Loan

[FUEGO]

I made the plunge. I just submitted an application to refinance my current ARM into the home equity loan at 4.99% for 10 years. That should save me $10,000 or so in interest over the next ten years (assuming they approve me). Relatively painless - took maybe 2 hours to set up the account and apply.

[flipstress]

FUEGO (and others), I am interested in paying off my 5.25% mortgage rate with this 4.99% HEL, since I have about 10 years left on the mortgage.

Would the interest on the HEL qualify as an itemized deduction on the IRS Form 1040 Schedule A, falling into the same spot as mortgage interest?

Do I specifically tell PenFed that I want to refinance (and so fill out the proper paperwork), so as to get the itemized deduction for the interest?

[flipstress]

I am answering my own question.

I looked at the 2007 instructions for Schedule A, and it says right so on page 5 re: Home Mortgage Interest, Lines 10 and 11 that
"A home mortgage is any loan that is secured by your main home or second home. It includes first and second mortgages, home equity loans, and refinanced mortgages."

PenFed, here I come! Thanks, twaddle, for posting about this.

[FUEGO]

You'll have to get a "home equity loan", not a refinance mortgage. But you can pay off your mortgage in full from the proceeds of the home equity loan, making your HEL a first mortgage. I asked them this question and they told me that it is okay to pay off your first mortage in full.

FYI for everyone - car loans are 5.29%. Maybe not the best but very low IMHO.

[Den26]

I applied online today, and was approved within 10 minutes. This is a very good deal. I had a HELOC with my local credit union at 7.75% variable, tied to the prime rate. But this is FIXED, at 4.99%. Thank you, everyone on this thread.

[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]

Quote:

Originally Posted by Den26 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]

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]

Quote:

Originally Posted by 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

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]

Quote:

Originally Posted by JPatrick 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.