Did Mortgage Rates Just Hit Rock Bottom?

Posted by Madison on September 30, 2009

I had to rearrange my schedule today. I subscribe to the rate watch at Pentagon Federal and they sent me an email that the 5/5 ARM rate had dropped to 4.0% with no points. And it’s a jumbo!

Are you kidding? Is it April Fool’s Day? Whatever the reason, I had to drop everything and apply for a refinance.

I’ve been considering refinancing lately, and I’ve been debating between the Easy Orange mortgage at ING Direct and the Pentagon Federal product. They’re two places that you can get a jumbo mortgage at conforming rates with reasonable closing costs. But there’s no more debate; the rate today at Penfed sealed the deal.

I’ve highlighted in the past the 5/5 ARM and how it’s the perfect ten year mortgage since the break even point for the 5/5 ARM versus a fixed 30 year loan is just after 10 years.

We locked in the 4.0% rate (I didn’t bother with paying any points) and we’ll save $350 each month from our old 5.125% rate. After about $1200 in closing costs we’ll break even in 4 months.

I’m still in shock! I’ve been a subscriber to the rate watch for years, and I don’t ever remember seeing a lower rate. Have we finally hit bottom? I don’t know, but I do know I had to have that rate when I saw it!

Want to shop around and see how the Penfed rates compare? You can get multiple quotes from to see how it stacks up.

Normally, this article wouldn’t go out until tomorrow morning, but I wanted to get it out tonight in case anyone else wants to lock in the rate before the night is over. Who knows what the rates will be in the morning…

Don’t forget, if you are a first time home buyer, you can combine it with the $8,000 First Time Home Buyer Tax Credit for a fantastic deal!

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Comments to Did Mortgage Rates Just Hit Rock Bottom?

  1. Congrats. How the heck did you only have to pay $1,200 at close?


  2. I second that, seriously howd u do it?


  3. @ PT & Stephanie: Nothing special, that’s what we’ve always paid with Penfed. It’s one of the reasons that I love them!


  4. Looks like the 4% is already gone.


  5. Yep, gone but 4.5% is still a good rate.


  6. @ Bryan: I figured it wouldn’t last long! Glad I locked in; hopefully others were able to do so too.

    @ PK: Isn’t it funny how the rate goes up, and it’s really still a pretty darn good rate? Just a year and a half ago, I was so pleased to get 5.125%… who knew it would come to this!


  7. $1,200 for closing costs does seem pretty ridiculously low right or am I missing something?

    Credit Card Chaser

  8. Hi Madison,

    Can anybody get mortgage from PenFed? i.e. is it for certain employers only? Wondering how you were qualified.

    Also, $1200 of closing costs sound very low..considering you have a decent house. If u can give rough breakup. So that we caa also take advantage of such deal in near future.

    Thanks much,



  9. @ Vic: The best part about Penfed, is that anyone can join. You just make a $20 donation to the National Military Family Association.

    @ Credit Card Chaser and Vic: Here’s a breakdown for closing costs on our $456k loan:

    $65 CLO Access fee
    $500 Title Insurance
    $175 Settlement or Closing Fee
    $365 Appraisal
    $13 Credit Report
    $7 Flood Certification
    $60 Recording Fee
    $40 Lien Release

    The last time we refinanced with Penfed, the closing costs came in within $10 of that.


  10. Thank you very much Madison, I had no clue that anyone could join PenFed. I used to come across many good deals from PenFed (discussed on other blogs) but didn’t pursue due to earlier mentioned impression.

    Thanks for the closing costs breakup, it helps. Actually it is really LOW..:-)

    I’ll join PenFed soon and enroll for mortgage alerts, their branch is just walking distance from my house.

    I have been following your blog for almost a year. You’re very sharp..with such attitude you’ll be a Millionaire sooner than you think..:-)

    Thanks again for your help.



  11. That GFE doesn’t include the 1% origination fee though — people need to remember that PenFed now charges that.


  12. @ epw: the 1% origination fee isn’t charged on the 5/5 ARM though.


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