Big time note for everyone who already has a PenFed mortgage and is considering a refinance:

As of last week, according to my loan processor, PenFed has started offering loan modifications on their 5/5 product (if you qualify). The terms are the same as the existing modification program for fixed loans, that is, you pay 1% of your loan amount, and they reamortize your loan to the new interest rate WITHOUT an increase in term (same payoff date). The best part is that I confirmed that the 5-year period before a rate adjustment is RESET. You get the adjusted rate for a full 60 months without the headaches of a refinance. This was a deal for me because it knocks 1.5% off my loan's interest rate but allows me to keep the 1% margin on future rate adjustments AND it saves most of the paperwork.

She said they are running a couple of weeks behind, so I will not be able to report on my experience for some time. However, if this plays out according to what I'm told, lots of folks could be saving some money.

UPDATE: Received call (same day) from PFCU regarding modification. They had my locked rate incorrect, but agreed to correct it. He confirmed that I will receive documents to sign in the latter half of November for a December 1st effective date. He confirmed that in addition to my nominal rate change, my maximum rate will also be adjusted down 1.5% so that the maximum my loan can ever be is 9%. He also confirmed what was said about about a fresh 60 months on the rate adjustment clock and confirmed that my margin over 5-year CMT does NOT change.

Also, fee payment may be by ACH or check OR it can be rolled into your loan. Mastercard or Visa payments are possible, but are treated as cash advances.

GermanExpat said:JimTravel73 said:Big time note for everyone who already has a PenFed mortgage and is considering a refinance:

As of last week, according to my loan processor, PenFed has started offering loan modifications on their 5/5 product. The terms are the same as the existing modification program for fixed loans, that is, you pay 1% of your loan amount, and they reamortize your loan to the new interest rate WITHOUT an increase in term (same payoff date). The best part is that I confirmed that the 5-year period before a rate adjustment is RESET. You get the adjusted rate for a full 60 months without the headaches of a refinance. This was a deal for me because it knocks 1.5% off my loan's interest rate but allows me to keep the 1% margin on future rate adjustments AND it saves most of the paperwork.

She said they are running a couple of weeks behind, so I will not be able to report on my experience for some time. However, if this plays out according to what I'm told, lots of folks could be saving some money.

Interesting that they do this. But dependent on your closing costs this can be a close call compared to a refinance. In my case refinancing would be cheaper then 1%.

Certainly true for people with higher-priced houses -- but it also offers a way (albeit an expensive one) to circumvent a readjustment of your LTV (as far as PFCU is concerned) in a declining market, avoid PMI, etc, for people who are floating close to 80% LTV and may actually be higher, even if they weren't when they got the loan in the first place.

I called and they said if I withdraw the app I can't apply again for 90 days...

JimTravel73 said:Also, fee payment may be by ACH or check OR it can be rolled into your loan. Mastercard or Visa payments are possible, but are treated as cash advances.

It was reported by Wethead in the Penfed Loan Mod Fixed Rate Thread that he used his Schwab 2% card and it was treated as a purchase.

dhl said:JimTravel73 said:Also, fee payment may be by ACH or check OR it can be rolled into your loan. Mastercard or Visa payments are possible, but are treated as cash advances.

It was reported by Wethead in the Penfed Loan Mod Fixed Rate Thread that he used his Schwab 2% card and it was treated as a purchase.

I find this interesting, because the documentation I received and have since returned, actually stated that it would be treated as a cash advance.

In any case, I received the paperwork Nov 12th, mailed all three pages (!) back with a check on the 14th, and the modification showed up yesterday with a "FEE PAID" notation on the PenFed website. Because of the way interest accrual works on the mortgage, the change is actually retroactive to November 1st, since it is November's interest that is reflected in December's payment.

Where's my easy button?