With rates plummeting these days, many people are choosing to refinance. My family falls into that bucket, as we refinanced our home almost five years ago (2004) at the low, low rate of 4.5% for a 5/1 mortgage. (In case you are curious, we ended up getting a 5/1 because while 30-year rates were also low, we felt it unlikely that we’d be staying in our current house more than 7 years.) At the time, I remember looking at historical rates and saying:
When will we ever be able to refinance at 40-year lows again?
Silly me, the answer turned out to be about five years later, in late 2008. Since our rates were about to float, and not trusting the bank to keep the rate reasonable, we decided to lock in rates for at least another five years. In the process, we evaluated almost every web-based pricing agent, several internet deals, and one professional mortgage broker.
The winner: Pentagon Federal Credit Union
To get a mortgage, you must join the credit union. You can do this for free if you or a family member served in the armed forces and has proof. Otherwise, you can sign up to join the National Military Family Association for $20. Yes, that’s right. $20.
I’ve been extremely happy with the service. In fact, when we originally engaged with them, the rates on a jumbo 5/5 mortgage (a unique mortgage they offer that resets every 5 years based on US Treasury rates) were at 5.375%. They have dropped twice since then, and they allowed us to reset at their current price of 4.625%.
Yes, I know there is probably a better deal out there. But I also know that most are worse.
In any case, they are worth checking out. Their rates are updated daily. Low closing costs. They depend on Fannie Mae for securitization, so it’s really a good deal if you have a good credit score and fit within guidelines. No points for loans under 70% LTV. 0.50 points for loans between 0.70% and 0.80% LTV.
If you find a better deal out there… don’t tell me. I’m happy enough as is. I may ask for you help again in 2014.
Or, at the rate we’re going, if rates plummet to 100 year lows in 2009, we might refinance again.
3% mortgages? That’s the magic of deflation…
Psychohistory 
Great Tip! I have been shopping for HEL and HELOC that will do 80% LTV.
Great Advice. You mention that the rates “dropped twice since then, and they allowed us to reset at their current price of 4.625%.” Is this before or after closing? If its after closing, did they charge you any fees to reset? Any limitations of this policy that you know of? Thanks!
They charged no fees. Technically, their rate lock policy does not require them to do this, but they did it anyway. They did it before closing, but weeks after rate lock.
Pingback: Personal Finance: Refinancing a Residential Mortgage for 2011 « Psychohistory