5/5 Adjustable Rate Mortgage (ARM)
 

Key Features

5/5 Adjustable Rate Mortgage 

  • For home purchases or refinancing up to $4 million
  • Offers not available on investment properties
  • See below for loan to value and combined loan to value limits for conforming, jumbo, super jumbo mortgages, and condos
  • See additional details below

Benefits

  • Free 90-day rate lock¹
  • Apply online for an instant pre-qualification
  • New! "One Click" Rate Reset Protection² 

Keep in Mind: Have these on-hand when you apply: your previous two Federal Income Tax Returns, W2, current pay stub, and banking statements.

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Details and Disclosures

5/5 ARMs: Offers available for purchases and refinances. The initial rate can change every 5 years by no more than 2 percentage points up or down, never to exceed 5 percentage points above the initial rate. When the rate adjusts, your new rate will be the then current index plus margin, which is currently set to 2.00 for the new products, as long as it does not exceed the 2% adjustment cap.

 

5/5 Adjustable Rate Mortgage (ARM) Closing Cost Promotion: Offer available for purchases and external refinances only. PenFed will pay your closing costs up to $10,000 including but not limited to: appraisal fee, tax service fee, CLO access fee, title fees, transfer tax fees, credit report fee, flood cert fee, recording fee, survey if required and work verification fee. This does not include: escrow interest, homeowner's insurance or owner's title insurance, the cost for a structural engineering or similar report, should the appraiser request one, or points to buy a rate down or applied to a loan. Points are the responsibility of the borrower and not covered in promotions. Builder or seller credits may reduce the amount of the closing cost credits. This promotion is not available for investment properties. Other restrictions also apply. Contact your PenFed mortgage consultant for any applicable additional restrictions and details about your loan. You must use one of our preferred title companies to get the closing cost credits. For New York properties, borrowers are required to pay title insurance premiums and may use any title company to obtain the closing cost credit. Offer is only available for owner occupied primary residence and second homes. Refinance of an existing PenFed mortgage is not eligible for the closing cost credit and borrowers will be required to pay all closing costs. For Limited Cash Out refinances, limitations on the amount of cash back at closing may require that all or a portion of the credits be applied toward principle reduction. Note the reimbursement of closing costs below.

 

Reimbursement of Closing Costs: If you pay this loan off and close the account earlier than the 36-month anniversary date of the loan closing, you will be obligated to pay PenFed a prorated amount of the closing cost credit received from PenFed. This amount will be added to any loan payoff amount requested prior to the 36 month anniversary date. The reimbursement amount will be prorated in equal amounts on a monthly basis. Closing costs credits to be reimbursed include all closing costs paid by PenFed except those paid to affiliated title companies. See contract addendum for details.

 

Investment properties not eligible for offer. 

 

¹For a purchase transaction, the rate cannot be locked until PenFed receives a ratified sales contract executed by all required parties.

  

²5/5 ARM Rate Reset Option: During the origination process for a 5/5 ARM, PenFed mortgage borrowers have the option of selecting the Rate Reset Option. The initial rate is 0.25% higher than the current 5/5 ARM rate. You may reset your rate five (5) times during the life of your loan. The initial reset may be elected one (1) calendar year after the date your loan closed (purchase) or the date the loan funded (refinance). When the rate reset feature is selected, the new rate will be calculated by selecting the lesser of (i) adding 2.25% to the Current Index (weekly average yield on US Treasury securities adjusted to a constant maturity of five years, as made available by the Federal Reserve Board) or (ii) adding 0.25% to PenFed's current rate offering for its 5/5 adjustable rate mortgage loan product. The new rate will be rounded to the nearest 0.125%. When exercising the rate reset feature, the new interest rate will be fixed for an additional five (5) year period. In order to exercise the rate reset option, the loan must be in good standing with no rate resets within the prior twelve (12) months.

 

All Mortgage Programs: The application of points will be determined by the loan-to- value (LTV) ratio combined with certain representative credit scores. Points also apply to certain cash-out refinance transactions, certain condominium transactions, and some transactions with subordinate financing. Origination fees may apply to certain programs. The origination fee may be waived by adding a 0.25% to the selected rate.

 

The applicant is responsible for the following fees and costs at the time of closing. Origination fee, appraisal fee, tax service fee, CLO access fee, title fees, transfer tax fees, credit report fee, flood cert fee, recording fee, survey if required and work verification fee, escrow reserves and interest due until first payment, other cost may be included due to program specific circumstances. This is not intended to be an all-inclusive list.

 

Escrows will only be waived if LTV is 80% or less in CA, OR, DC, VT & NY; 75% in all other states.

 

Borrowers are required to have sufficient reserve assets available to cover 6 months full payments including principal, interest, homeowner’s insurance, property taxes and homeowner associated dues and/or mortgage insurance, if applicable. For non-primary residences, we require 12 months of reserve assets.

 

If a loan is withdrawn, the applicant may not reapply for at least 90 days from the date the application was withdrawn. All above disclosures apply to non-Veteran’s Administration (VA) loans. VA loans have different guidelines and eligibility requirements.

    

Conforming Mortgages: For loan amounts from $25,000 to $417,000. The maximum combined loan- to-value (CLTV) is 95%; 80% LTV and above are subject to private mortgage insurance (PMI). The maximum LTV and CLTV for condominiums is 80%. 

 

Jumbo Mortgages: For loan amounts above $417,000 to $750,000. The maximum loan-to-value (LTV) is 80% and the maximum combined loan-to-value (CLTV) is 90%. The maximum LTV and CLTV for condominiums is 80%.

 

Super Jumbo Mortgages: For loan amounts above $750,000. 5/5 ARMs up to $4 million and Fixed Loans up to $2 million. The maximum loan-to-value (LTV) and combined loan-to-value (CLTV) is 80%. In DC, MD and VA only, the maximum LTV and CLTV for condominiums as a primary residence is 80%. The LTV and CLTV in all other states for condominiums is 75%. The LTV and CLTV for second home condominiums is 70% in all states.

 

All above disclosures apply to non-Veteran's Administration (VA) loans. VA loans have different guidelines and eligibility requirements. 

  

All rates and offers are as of April 2014 and are subject to change without notice. Restrictions apply to existing PenFed mortgage borrowers. Other restrictions may apply. Contact your PenFed mortgage consultant for any applicable additional restrictions and details about your loan. To receive any advertised product you must become a member of PenFed by opening a share (savings) account. Federally insured by the NCUA. We do business in accordance with the Federal Fair Housing Law and the Equal Credit Opportunity Act.