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Message
PenFed 5/5 ARM Program
Posted on 11/18/13 at 4:23 pm
Posted on 11/18/13 at 4:23 pm
LINK
What is the good people of MT thoughts on this program? My wife and I are shopping for a mortgage and came across this...my brother works for the Feds and so I think I'd be eligible.
ETA: After the first 60 months, does the rate then become fixed at the new 3% rate?
What is the good people of MT thoughts on this program? My wife and I are shopping for a mortgage and came across this...my brother works for the Feds and so I think I'd be eligible.
ETA: After the first 60 months, does the rate then become fixed at the new 3% rate?
This post was edited on 11/18/13 at 4:28 pm
3
Posted on 11/18/13 at 5:04 pm to Chaplain
quote:
ETA: After the first 60 months, does the rate then become fixed at the new 3% rate?
No.
Every 5 years, it can relock at a rate no greater than 2% more than the previous rate; with a maximum ceiling of 5% greater than the initial 60 month rate. It will depend on the current prime rate at the time of increase every 5 years.
You could be at 4.652% starting in Year 5, 6.652% in year 10 and 7.652% (max of the example) in year 15. This is your worst case scenario.
ARMs are never a good choice unless you know with 100% certainty that you will sell out or refinance before a rate increase.
Rates are still at historical lows, so they will go up. How much remains the question.
This post was edited on 11/18/13 at 5:17 pm
Posted on 11/18/13 at 8:51 pm to Captain Ron
thanks for that great explanation. Makes sense.
Posted on 11/18/13 at 8:53 pm to Chaplain
does anyone know of any mortgage loan specials being offered right now?
Posted on 11/18/13 at 9:14 pm to Chaplain
ARMs will be a thing of the last, at least with less than 61 month balloons come 1/14.
Posted on 11/18/13 at 10:29 pm to Chaplain
quote:
ETA: After the first 60 months, does the rate then become fixed at the new 3% rate?
their ad is a little screwed up...
says something like 2.7853 for the first 60
3.2745 for the next 300
This post was edited on 11/18/13 at 10:30 pm
Posted on 11/19/13 at 2:49 pm to bryso
They don't have any way to predict the future rate, so they basically show what the rate would be based on the rate-setting formula if nothing were to change between now and then. What this highlights (I think) is that the intro rate is lower than what the formula says it should be by about half a percentage point.
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