1. Discover you’re eligible to become a PenFed member
2. Open a Savings/Share Account and deposit at least $5
OUR GREAT RATES
Rates As Low As1
APR As Low As1
* Payment Example
This payment example assumes a loan with points, a loan amount of $ and an estimated property value of . The property is located in Alexandria, VA and is within Fairfax county. The property is an existing single family home and will be used as an investment property. The rate lock period is 60 days and the assumed credit score is .
At a interest rate, the APR for this loan type is and the monthly payment schedule would be:
payments of $ at an interest rate of
payment of $ at an interest rate of
If an escrow account is required or requested, the actual monthly payment will also include amounts for real estate taxes and homeowner's insurance premiums.
1Rates are based on evaluation of credit history, loan-to-value, and loan term, so your rate may differ. Rates subject to change at any time.
This is a 10 year fixed rate mortgage with a balloon payment at maturity. The loan is amortized over 30 years with the balance due and payable in full at the time of maturity. Loan matures in 10 years; you may apply to refinance the balloon payment at maturity.
Funds can only be used to acquire, improve, or maintain rental property where the owner will not occupy for more than 14 days.
Investment Property Mortgages: For loan amounts from $25,000 to $. Guam, Alaska and Hawaii maximum conforming loan amount $. The maximum combined loan- to-value (CLTV) is 75% for purchases and limited cash-out loans (where funds will be used to pay off an existing first mortgage loan with little or no cash back) or 70% for cash-out loans (where additional funds will be obtained to acquire, improve, or maintain rental property above any existing mortgage, if applicable)
For purchase applications, please submit a copy of your fully signed ratified purchase agreement to email@example.com in a timely manner to ensure PenFed can meet your closing date.
The applicant is responsible for the following fees and costs at the time of closing: Appraisal fee, tax service fee, application fee or CLO access fee, if applicable, 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 costs may be included due to program specific circumstances. This is not intended to be an all-inclusive list.
Additional reserve requirements may apply.
If you withdraw an application that was locked and reapply within 30 days, the new application is subject to worst case pricing.
All above disclosures apply to Non-Veteran’s Administration (VA) loans. VA loans have different guidelines and eligibility requirements.
All rates and offers are in effect as of , offered for a limited time and subject to change without notice. Restrictions apply to existing PenFed mortgage borrowers. Other restrictions may apply. Contact your PenFed Mortgage Representative 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.
ARM vs Fixed Rate Mortgages: Which One Should You Choose?
Posted October 2016 by PenFed Team
With mortgage interest rates at an all-time low you’re probably thinking about finally taking the big leap and becoming a homeowner or refinancing your existing home to a lower interest rate. However, the age-old question looms in front of you…which mortgage should I choose, an ARM or a fixed-rate mortgage?
The answer: it depends on your needs. While there are pros and cons to both mortgages, the real question is not which mortgage is better, but which mortgage will suit my needs.
Let’s take a look at both an ARM and fixed-rate mortgage and then you can decide which option is going to afford you your dream home or that tantalizing interest rate that will have you running to refinance your home.
Adjustable-rate mortgages or ARMs have interest rates that adjust over a period of time. ARMs have had a notoriously bad reputation because of the mortgage meltdown and subsequent recession.
While this reputation was justified in the past, most of those exotic ARMs no longer exist. Today, financial institutions offer hybrid ARMs—like PenFed’s 5/5 ARM, which has a fixed-rate for five years and then the rate adjusts once every five years. This is a unique mortgage product as most ARMs adjust annually after the initial fixed terms.
The thought of an adjustable interest rate probably has you fearing skyrocketing monthly mortgage payments. Fear not, all ARMs have caps—a limit on the amount the interest rate can adjust—and ceilings—the highest the interest rate is allowed to become during the life of the loan. Using PenFed’s 5/5 ARM as an example, the initial interest rate will change every five years by no more than two percentage points up or down (the cap). This rate will never exceed five percentage points above the initial rate (the ceiling).
A fixed-rate mortgage provides a reliable and fixed monthly payment for the life of the loan. Because your total mortgage payment remains stable from month to month, homeowners can easily budget their monthly expenses.
Financial institutions offer various fixed-rate mortgages including the more common fixed-rate mortgages: 15, 20, and 30-year. Out of the three the 30-year fixed is the most popular mortgage because it usually offers the lowest monthly payment. However, the lower monthly payment comes at a cost of paying more in interest over the life of the loan.
So, now that you know a little more about ARMs and fixed-rate mortgages here are a few things you should consider when making a decision about which mortgage will best suit your needs:
How long do you plan to stay in your home? If you don’t plan to stay in your home for the long haul, you may want to consider an ARM, which has a lower interest rate than the 30-year fixed and you save big money in interest charges. If you move or refinance within five years before the interest rate adjusts you can avoid a payment hike. Conversely, if you’ve found or are already in the home of your dreams, a fixed-rate mortgage makes more sense and will provide you stable payments for years to come.
What can you afford? Knowing how much you can afford to pay month to month in mortgage payments will also help you decide between an ARM or fixed-rate mortgage. If you’re working within a tight budget, the ARM may be a more attractive option since the payments will be lower than a 30-year fixed. But, unless you anticipate a raise or another source of added income, ask yourself if you’ll be able to afford your mortgage payment when the ARM’s interest rate increases. If not, don’t take the risk. Go with the fixed-rate mortgage and get stable monthly payments.
The Takeaway: When it’s all said and done, the goal is to get you into the home of your dreams or refinance your existing home without breaking your pockets. Both the ARM and fixed-rate mortgage are products that will help you reach your goal. However, the path you take to get to your goal depends on which mortgage will suit your needs.
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