15/15 adjustable rate mortgage

[José Linares]

Greetings,

Just wondering if anyone had used one of these before? Pro/Cons?  We can pay off the loan prior to the 15 year mark but not sure if they charge an early payoff penalty fee.

[Chris Mason]

I am a correspondent lender for Pentagon Federal Credit Union and love their 15/15 ARM.

I don't do business in Florida, but if you can find someone down there that offers it as a correspondent lender, it'll sometimes be a better deal than PenFed direct.

If you're going to pay it off or sell prior to the 15 year mark, it's a no-brainer in 100% of cases. Owner occupied SFR or duplex, no 3-4 units (...yet).

Holding constant some rate that is better than what anyone out there is offering for 30 year fixed loans...

PenFed retail/direct:

1% origination fee. 

0 discount points.

PenFed correspondent:

Correspondent's origination fee, call it $1500 just for kicks.

0.25 discount points. 

For larger loan amounts, PenFed correspondent is a way better deal than PenFed direct. Their origination and underwriting is a hot pile of inefficient Pentagon-like crap, which is why they have that giant 100 basis points origination fee. For smaller loan amounts, PenFed direct is the better deal.