PenFed rate reset?

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
Hoosierdom
Posts: 20
Joined: Mon May 08, 2017 6:06 pm

PenFed rate reset?

Post by Hoosierdom » Mon May 08, 2017 6:18 pm

I am 4 years into a 5/5 ARM with PenFed. I am currently paying 2.5% and am due to have a rate adjustment in March of 2018 which is set to be 2 points over the 5 year treasury constant maturity. So, as of right now it looks like things would adjust to 3.8 or so. I logged onto my account last night and for $250 I can fill out some online form to reset my rate immediately to 2.9%. I realize those extra months at the higher rater are a minus, but it almost seems too good to be true. Am I missing something? Is there some reason not to do it?

What is there motivation for offering this? The only thing I can think of is that they are afraid I will refi with someone else, but I don't think I can get that rate, can I?

new2bogle
Posts: 1359
Joined: Fri Sep 11, 2009 2:05 pm

Re: PenFed rate reset?

Post by new2bogle » Mon May 08, 2017 7:09 pm

Do this and dont look back. I did this last year. It is exactly what it sounds like. In my case I was at 3.1% or so and locked in 2.65% or so for the next 5 years. In my case I got an extra ~9 months at the lower rate, which was great.

Lock in a low rate now for the next five years. My crystal ball says rates are going up.

Lacrocious
Posts: 323
Joined: Thu Mar 22, 2007 9:45 pm
Location: Wisconsin

Re: PenFed rate reset?

Post by Lacrocious » Tue May 09, 2017 11:09 pm

Hoosierdom wrote:...I logged onto my account last night and for $250 I can fill out some online form to reset my rate immediately to 2.9%....
Hi Hoosierdom,
I am in a similar boat - my rate 5/5 ARM will change in summer 2018. Where do you see the info on the $250 rate reset and the 2.9% rate? All the current rates for refi's are higher.

Thanks
- L

psychoslowmatic
Posts: 167
Joined: Fri Jul 19, 2013 2:34 pm

Re: PenFed rate reset?

Post by psychoslowmatic » Wed May 10, 2017 7:08 am

Thread on FW about this:

https://www.fatwallet.com/forums/finance/1559414

Going from memory the rate is based off the current 5/5 rate, and can change at any time. It sounds like a great deal to me.

Lacrocious
Posts: 323
Joined: Thu Mar 22, 2007 9:45 pm
Location: Wisconsin

Re: PenFed rate reset?

Post by Lacrocious » Wed May 10, 2017 8:07 pm

@psychoslowmatic
Thank you for the link. I will keep an eye out at PenFed online. I am a month or two away from the 9 month window. I don't like the idea of my 2.5% increasing - but if I can lock in a lower rate - that may be worth it. I will have to look over costs vs. how much longer we will stay in the house to see the break even point.

- L

grok87
Posts: 8511
Joined: Tue Feb 27, 2007 9:00 pm

Re: PenFed rate reset?

Post by grok87 » Fri Jan 05, 2018 4:11 pm

very helpful thread...

So i am now facing the penfed 5/5 arm reset decision myself.

my Current rate is 2.75% and the offered reset is 3.3125% for the next 66 months. So the downside is that i would be increasing my interest rate for the next 6 months to get a lower interest rate of 3.3125% (vs. say 4.3%) for the following 5 years.

i can calculate the payback period myself (there is a flat fee as well which means its a bit longer than 3.5 months). But my question is, does anyone know how taking the offer affects the mortgages interest rate caps? in other words, right now, in 66 months there is a risk that the rate could be as high as 6.75% (if it jumps 2% in 6 month and then another 2% in 66 months). if i do the reset does that mean the most the rate could be in 66 months is 5.3125%?

thanks in advance.

cheers,
grok
Keep calm and Boglehead on. KCBO.

an_asker
Posts: 2205
Joined: Thu Jun 27, 2013 2:15 pm

Re: PenFed rate reset?

Post by an_asker » Fri Jan 05, 2018 4:21 pm

grok87 wrote:
Fri Jan 05, 2018 4:11 pm
So i am now facing the penfed 5/5 arm reset decision myself.

my Current rate is 2.75% and the offered reset is 3.3125% for the next 66 months. So the downside is that i would be increasing my interest rate for the next 6 months to get a lower interest rate of 3.3125% (vs. say 4.3%) for the following 5 years.

i can calculate the payback period myself (there is a flat fee as well which means its a bit longer than 3.5 months). But my question is, does anyone know how taking the offer affects the mortgages interest rate caps? in other words, right now, in 66 months there is a risk that the rate could be as high as 6.75% (if it jumps 2% in 6 month and then another 2% in 66 months). if i do the reset does that mean the most the rate could be in 66 months is 5.3125%?

thanks in advance.

cheers,
grok
I would assume so, but the easiest way to find out would be to make a quick phone call to PenFed :-)

I didn't (make that call, that is), because at the rate we are hitting the principal, we are on track to get rid of the remaining principal before the next reset hits us in just under five years. We reset from 2.75% to 2.935%.

sc9182
Posts: 218
Joined: Wed Aug 17, 2016 7:43 pm

Re: PenFed rate reset?

Post by sc9182 » Fri Jan 05, 2018 5:06 pm

Typical ARM would increase/decrease a max +2 or -2 from the 'your current' rate at the time of rate-change/reset. (be careful when choosing ARM's which have rate-reset upto 5% or 6% upwards, at the time of its "first rate-reset". Stay AWAY from such ARMs, time to do ReFi those now!)

Now, if you 'current rate is' 3.125, would imagine 5.125 be the max cap (if rate going upwards to maximum) upon 5-year additional term. But, wouldn't know PenFed's terms (BTW, we have PenFed too, and a few months ago did rate-reset to 2.95% ish, good for next 5-years; PenFed 5/5 ARM rocks!)

Like the earlier posted mentioned, if you are not in a position to fully pay off (or almost fully pay off) principal by the time of rate-reset term, and in such case if the rates increases adversely, you may not be most suitable candidate for taking up an ARM product, let alone in current raising interests environment.

Better to get refi to a fixed mortgage/rate right now, if your principal balance is a bit on high side (for your finances/comfort).

Also, if you happen to have Home equity loan (or HELOC with high balances), may be time to consolidate with a Refi (Home equity not tax-deductible this year onward)

grok87
Posts: 8511
Joined: Tue Feb 27, 2007 9:00 pm

Re: PenFed rate reset?

Post by grok87 » Fri Jan 05, 2018 10:11 pm

an_asker wrote:
Fri Jan 05, 2018 4:21 pm
grok87 wrote:
Fri Jan 05, 2018 4:11 pm
So i am now facing the penfed 5/5 arm reset decision myself.

my Current rate is 2.75% and the offered reset is 3.3125% for the next 66 months. So the downside is that i would be increasing my interest rate for the next 6 months to get a lower interest rate of 3.3125% (vs. say 4.3%) for the following 5 years.

i can calculate the payback period myself (there is a flat fee as well which means its a bit longer than 3.5 months). But my question is, does anyone know how taking the offer affects the mortgages interest rate caps? in other words, right now, in 66 months there is a risk that the rate could be as high as 6.75% (if it jumps 2% in 6 month and then another 2% in 66 months). if i do the reset does that mean the most the rate could be in 66 months is 5.3125%?

thanks in advance.

cheers,
grok
I would assume so, but the easiest way to find out would be to make a quick phone call to PenFed :-)

I didn't (make that call, that is), because at the rate we are hitting the principal, we are on track to get rid of the remaining principal before the next reset hits us in just under five years. We reset from 2.75% to 2.935%.
thanks.
Keep calm and Boglehead on. KCBO.

grok87
Posts: 8511
Joined: Tue Feb 27, 2007 9:00 pm

Re: PenFed rate reset?

Post by grok87 » Sat Jan 06, 2018 11:45 am

sc9182 wrote:
Fri Jan 05, 2018 5:06 pm
Typical ARM would increase/decrease a max +2 or -2 from the 'your current' rate at the time of rate-change/reset. (be careful when choosing ARM's which have rate-reset upto 5% or 6% upwards, at the time of its "first rate-reset". Stay AWAY from such ARMs, time to do ReFi those now!)

Now, if you 'current rate is' 3.125, would imagine 5.125 be the max cap (if rate going upwards to maximum) upon 5-year additional term. But, wouldn't know PenFed's terms (BTW, we have PenFed too, and a few months ago did rate-reset to 2.95% ish, good for next 5-years; PenFed 5/5 ARM rocks!)

Like the earlier posted mentioned, if you are not in a position to fully pay off (or almost fully pay off) principal by the time of rate-reset term, and in such case if the rates increases adversely, you may not be most suitable candidate for taking up an ARM product, let alone in current raising interests environment.

Better to get refi to a fixed mortgage/rate right now, if your principal balance is a bit on high side (for your finances/comfort).

Also, if you happen to have Home equity loan (or HELOC with high balances), may be time to consolidate with a Refi (Home equity not tax-deductible this year onward)
i think you are right to point out the idea of refinancing into a fixed rate loan. it's a funny yield curve right now. 30 year mortgage rates are not really that much higher than the 5/5 arm.
Keep calm and Boglehead on. KCBO.

Semaphore
Posts: 4
Joined: Sat Apr 21, 2018 7:53 am

Re: PenFed rate reset?

Post by Semaphore » Sat Apr 21, 2018 8:15 am

It's a year later than OP and we are in almost the same position. We are paying 2.5% (was 2.75%, used points to bring it down) on a jumbo loan, and are scheduled for a rate adjustment in Feb 2019. However, the rate reset terms are considerably worse than OP: $500 for a reset to .0625% (1/16th percent) reduction to today’s 5/5 ARM rate. So today, the reset would go to 3.8125% for the next 68 months. The alternative is an adjustment to 4.625% in Feb, at current rates.

I have a few questions:
- For how long, typically, are these offers available? I know they could disappear at any time, but in your experience were they available for days? weeks? months?
- Does the offer change over time or does it usually stay constant?

Our situation is that we are either going to move this year to another house in the same real estate market, or we will stay put for another 3-7 years. We should know within a month which it will be. If we end up staying, then we may compare the rate reset to refinancing to a fixed rate mortgage.
My inclination is to wait and watch how rates change, but this may be a bad strategy if the offer disappears at the end of the month, or if rates keep going up as they have been.

Lacrocious
Posts: 323
Joined: Thu Mar 22, 2007 9:45 pm
Location: Wisconsin

Re: PenFed rate reset?

Post by Lacrocious » Sat Apr 21, 2018 11:10 am

Semaphore wrote:
Sat Apr 21, 2018 8:15 am
...rate reset terms are considerably worse than OP: $500 for a reset to .0625% (1/16th percent) reduction to today’s 5/5 ARM rate. ...
I have a few questions:
- For how long, typically, are these offers available? I know they could disappear at any time, but in your experience were they available for days? weeks? months?
- Does the offer change over time or does it usually stay constant?
We took this in February - similar 2.5% rate, but rate the reset rate went to 3.4375% after the discount and the cost was $250. I don't know if the cost changed overall or if it is related to mortgage size ($189K for us).

I can't find the original web off, but I know there were some time restrictions on it. If I remember correctly, we had a few months to accept before it expired - but not too long. If you waited too close to the normal reset date, the offer expired. Take a look at the web page they point you to from the email offer. It had those details on it for us.

We didn't see the offer change over time, other than the obvious tie to the "current 5/5 arm rate" - as that rate changes, so does your reset rate.

If you do this - word of warning to pay attention to any automated payments you have setup. Having a "Paid in Full" payment setup doesn't mean it will automatically change with the rate reset. You need change it to the new payment amount and include the reset fee for the first payment if you don't pay it separately. I had to call PenFed to clean this up. No issue, just a hassle as I noticed right away that the automated payment was "smaller than expected".

Good Luck,
- L

queenswake
Posts: 2
Joined: Fri May 04, 2018 9:18 pm

Re: PenFed rate reset?

Post by queenswake » Fri May 04, 2018 9:40 pm

I am confused. The button just appeared for one of my loans and I am seeing the following:

Lock in your new rate for the next adjustment period
Get a .0625% (1/16th percent) reduction to today’s 5/5 ARM rate
No closing costs and a low $500 modification fee

So this seems to say that you are locking in the rate for when your 5 years is up, NOT resetting the rate as of today. So if I did this, I'd still get my current low rate through when my 5 years is up and the rate adjust will happen, right? Why are people saying that if you do this, that rate you lock into takes affect as of today?

Lacrocious
Posts: 323
Joined: Thu Mar 22, 2007 9:45 pm
Location: Wisconsin

Re: PenFed rate reset?

Post by Lacrocious » Sat May 05, 2018 8:56 am

@queenswake - I had the exact same wording and it does take effect immediately. Thus, you are giving up some months at a lower rate by performing the rate reset in order lock in 5 years of a much lower rate than you can get by waiting until your rate does reset at the end of the current 5 year term. Basically - when you do the reset, that is the start of an adjustment period. You give some $ now and over the next few months to gain $$$$ over the 5 year period.

- L

queenswake
Posts: 2
Joined: Fri May 04, 2018 9:18 pm

Re: PenFed rate reset?

Post by queenswake » Sat May 05, 2018 10:29 am

Lacrocious wrote:
Sat May 05, 2018 8:56 am
@queenswake - I had the exact same wording and it does take effect immediately. Thus, you are giving up some months at a lower rate by performing the rate reset in order lock in 5 years of a much lower rate than you can get by waiting until your rate does reset at the end of the current 5 year term. Basically - when you do the reset, that is the start of an adjustment period. You give some $ now and over the next few months to gain $$$$ over the 5 year period.

- L
Thanks for the clarification. The wording does not imply that. So your next 5 year period starts when you hit that button and complete the Reset. Your original date of when your loan would always reset when you first got the loan is now gone?

Pessimist55
Posts: 48
Joined: Thu May 14, 2015 12:16 am

Re: PenFed rate reset?

Post by Pessimist55 » Sat May 05, 2018 10:32 am

I have the exact same 5/5 2.50% and it is coming for renewal in about a year. will definitely jump on the offer if I am able to get it as they can adjust a minimum 2%.

Lacrocious
Posts: 323
Joined: Thu Mar 22, 2007 9:45 pm
Location: Wisconsin

Re: PenFed rate reset?

Post by Lacrocious » Sat May 05, 2018 10:44 pm

queenswake wrote:
Sat May 05, 2018 10:29 am
... Your original date of when your loan would always reset when you first got the loan is now gone?
That is how it worked for us. New 5 year period from acceptance date.
-L

Semaphore
Posts: 4
Joined: Sat Apr 21, 2018 7:53 am

Re: PenFed rate reset?

Post by Semaphore » Thu May 17, 2018 5:47 pm

Thank you so much for the clarifications. They were very helpful! I just checked today and the reset rate is now 4.1875% :(

My impression was that the index rate used is the LIBOR. Is this still the case or have they moved over to SOFR?

grok87
Posts: 8511
Joined: Tue Feb 27, 2007 9:00 pm

Re: PenFed rate reset?

Post by grok87 » Thu May 17, 2018 9:01 pm

Semaphore wrote:
Thu May 17, 2018 5:47 pm
Thank you so much for the clarifications. They were very helpful! I just checked today and the reset rate is now 4.1875% :(

My impression was that the index rate used is the LIBOR. Is this still the case or have they moved over to SOFR?
i thought it was 5 year Constant maturity treasury (CMT)
https://fred.stlouisfed.org/series/DGS5
Keep calm and Boglehead on. KCBO.

tam950
Posts: 1
Joined: Fri Jun 08, 2018 2:57 pm

Re: PenFed rate reset?

Post by tam950 » Fri Jun 08, 2018 3:01 pm

Semaphore wrote:
Thu May 17, 2018 5:47 pm
Thank you so much for the clarifications. They were very helpful! I just checked today and the reset rate is now 4.1875% :(

My impression was that the index rate used is the LIBOR. Is this still the case or have they moved over to SOFR?
My reset is coming up next April, but I've yet to see anything about a reset. Where exactly on the Penfed page are people seeing the reset option? Was everyone also contacted with an email?

Lacrocious
Posts: 323
Joined: Thu Mar 22, 2007 9:45 pm
Location: Wisconsin

Re: PenFed rate reset?

Post by Lacrocious » Fri Jun 08, 2018 11:27 pm

Yes - via email. The subject is "You're Eligible For A Mortgage Rate Reset". It was about 6 months before the rate reset for us.
- L

BruDude
Posts: 2809
Joined: Thu Dec 30, 2010 12:28 am
Location: Las Vegas

Re: PenFed rate reset?

Post by BruDude » Sat Jun 09, 2018 12:56 am

Glad I took advantage of this 2 months ago at 3.6%. Current rate is 4%. I could’ve had it as low as 3.1625% a couple months before that.

Hoosierdom
Posts: 20
Joined: Mon May 08, 2017 6:06 pm

Re: PenFed rate reset?

Post by Hoosierdom » Sat Jun 09, 2018 6:49 am

My first offer was only available for about a week. 4 or 5 months later I got the same offer again and jumped on it. I don't believe I ever received an email from them: a button just showed up on my account overview page.

I assume it was just a typo but an earlier poster referred to a 2% minimum adjustment, it's a 2% maximum.

dwinant
Posts: 1
Joined: Sun Apr 08, 2018 8:12 pm

Re: PenFed rate reset?

Post by dwinant » Thu Jul 05, 2018 8:04 am

I was able to game this a bit. Prepay some payments at your current lower rate and then accept the offer.

Tatka75
Posts: 6
Joined: Tue May 01, 2012 2:53 pm
Location: Bethesda, MD

Re: PenFed rate reset?

Post by Tatka75 » Thu Jul 12, 2018 12:02 pm

How does it work, exactly? You don't have to pay next couple of months?

alias
Posts: 1
Joined: Thu Jul 12, 2018 12:01 pm

Re: PenFed rate reset?

Post by alias » Thu Jul 12, 2018 12:06 pm

dwinant wrote:
Thu Jul 05, 2018 8:04 am
I was able to game this a bit. Prepay some payments at your current lower rate and then accept the offer.
How did you do that? Did you prepay a few months before doing the reset? You will have to pay the difference for those months, no?

maineminder
Posts: 45
Joined: Sat Sep 24, 2011 9:48 am

Re: PenFed rate reset?

Post by maineminder » Thu Jul 12, 2018 12:32 pm

grok87 wrote:
Thu May 17, 2018 9:01 pm
Semaphore wrote:
Thu May 17, 2018 5:47 pm
Thank you so much for the clarifications. They were very helpful! I just checked today and the reset rate is now 4.1875% :(

My impression was that the index rate used is the LIBOR. Is this still the case or have they moved over to SOFR?
i thought it was 5 year Constant maturity treasury (CMT)
https://fred.stlouisfed.org/series/DGS5
5 year constant maturity was my understanding as well. My first 5 year rate change comes next year.

grok87
Posts: 8511
Joined: Tue Feb 27, 2007 9:00 pm

Re: PenFed rate reset?

Post by grok87 » Thu Jul 12, 2018 4:41 pm

maineminder wrote:
Thu Jul 12, 2018 12:32 pm
grok87 wrote:
Thu May 17, 2018 9:01 pm
Semaphore wrote:
Thu May 17, 2018 5:47 pm
Thank you so much for the clarifications. They were very helpful! I just checked today and the reset rate is now 4.1875% :(

My impression was that the index rate used is the LIBOR. Is this still the case or have they moved over to SOFR?
i thought it was 5 year Constant maturity treasury (CMT)
https://fred.stlouisfed.org/series/DGS5
5 year constant maturity was my understanding as well. My first 5 year rate change comes next year.
You should start getting notified of being eligible for the reset about 8 months before your reset date.
If you want to do it I think you have to pull the trigger 45 days before your reset date.
Also you can’t be paid ahead or something like that.
It took me a while to figure out when my reset date was. I think it’s a month before your payment changes.
Keep calm and Boglehead on. KCBO.

maineminder
Posts: 45
Joined: Sat Sep 24, 2011 9:48 am

Re: PenFed rate reset?

Post by maineminder » Thu Jul 12, 2018 7:36 pm

Also you can’t be paid ahead or something like that.
Can you clarify? I'd do something that was suggested earlier. Make a principal payment prior to the rate adjustment in order to reduce the total amount of interest paid and adjust based on the recent tax law changes.

Are you suggesting I can't pay down the loan prior to accepting the rate reset?

grok87
Posts: 8511
Joined: Tue Feb 27, 2007 9:00 pm

Re: PenFed rate reset?

Post by grok87 » Thu Jul 12, 2018 7:39 pm

maineminder wrote:
Thu Jul 12, 2018 7:36 pm
Also you can’t be paid ahead or something like that.
Can you clarify? I'd do something that was suggested earlier. Make a principal payment prior to the rate adjustment in order to reduce the total amount of interest paid and adjust based on the recent tax law changes.

Are you suggesting I can't pay down the loan prior to accepting the rate reset?
Well i'm not sure. but that's what it said on my reset offer in the footnotes, something like "you can't be paid more than one or two months ahead". To be honest i really don't know what that means. maybe others can comment. maybe it is ok to make an additional principal payment as long as that doesn't mean you are paid ahead?
Keep calm and Boglehead on. KCBO.

maineminder
Posts: 45
Joined: Sat Sep 24, 2011 9:48 am

Re: PenFed rate reset?

Post by maineminder » Thu Jul 12, 2018 8:19 pm

Well i'm not sure. but that's what it said on my reset offer in the footnotes, something like "you can't be paid more than one or two months ahead". To be honest i really don't know what that means. maybe others can comment. maybe it is ok to make an additional principal payment as long as that doesn't mean you are paid ahead?
Got it. When and if I get the offer I'll need to crawl through the fine print as well. The difference between pre-paid and a principal payment does seem subtle.

Semaphore
Posts: 4
Joined: Sat Apr 21, 2018 7:53 am

Re: PenFed rate reset?

Post by Semaphore » Sun Sep 30, 2018 7:36 pm

About to pull the trigger at last! Our reset rate is, for now, 3.9375%.

The terms in their FAQ say: " 1. Member must meet eligibility requirements and account must not be paid ahead more than one (1) calendar month from the current month."

Have a question about prepaying a month. Today is the last day of September, and we already have set up our payment for Oct 1 to take effect tomorrow. What's the most effective way to do this? Wait until the business day begins on Oct 1, make my payment for November, then take the rate reset (praying that it doesn't jump up to 4.1% again)? Or can I even prepay for December?

grok87
Posts: 8511
Joined: Tue Feb 27, 2007 9:00 pm

Re: PenFed rate reset?

Post by grok87 » Sun Sep 30, 2018 7:44 pm

Semaphore wrote:
Sun Sep 30, 2018 7:36 pm
About to pull the trigger at last! Our reset rate is, for now, 3.9375%.

The terms in their FAQ say: " 1. Member must meet eligibility requirements and account must not be paid ahead more than one (1) calendar month from the current month."

Have a question about prepaying a month. Today is the last day of September, and we already have set up our payment for Oct 1 to take effect tomorrow. What's the most effective way to do this? Wait until the business day begins on Oct 1, make my payment for November, then take the rate reset (praying that it doesn't jump up to 4.1% again)? Or can I even prepay for December?
probably worth a call to penfed. i wonder if one can make extra principal payment and not have it be considered a prepaid mortgage payment.
Keep calm and Boglehead on. KCBO.

Semaphore
Posts: 4
Joined: Sat Apr 21, 2018 7:53 am

Re: PenFed rate reset?

Post by Semaphore » Sun Sep 30, 2018 8:28 pm

Thanks, that's probably what I will do.
I would guess that if we make an extra principal payment, it means that we still would have the usual payment+ interest due at the beginning of the month? But I can make an extra principal payment at any time and it wouldn't affect the interest rate; it would just affect the total interest paid if that makes sense. But making extra principal payments are worth it only if our other investments are doing worse than 3.9375%, which is not the case at the moment.

grok87
Posts: 8511
Joined: Tue Feb 27, 2007 9:00 pm

Re: PenFed rate reset?

Post by grok87 » Mon Oct 01, 2018 1:19 pm

Semaphore wrote:
Sun Sep 30, 2018 8:28 pm
Thanks, that's probably what I will do.
I would guess that if we make an extra principal payment, it means that we still would have the usual payment+ interest due at the beginning of the month? But I can make an extra principal payment at any time and it wouldn't affect the interest rate; it would just affect the total interest paid if that makes sense.
makes sense
wrote: But making extra principal payments are worth it only if our other investments are doing worse than 3.9375%, which is not the case at the moment.
it depends on how you look at it. i tend to compare my mortgage rate after tax to treasury yields after tax. let's take the top rate just because i can remember it (37%).

3.9375%*(1-37%) = 2.48% = after tax mortgage rate

5 year treasury rate = 2.95%
after tax = 2.95%*(1-37%) = 1.86%

so according to this way of thinking it costs one 0.64% a year to not pay off one's mortgage. that may be an acceptable cost for liquidity or it may not.

note i picked the 5 year treasury rate as that matches the time horizon till next penfed reset.

cheers,
grok
Keep calm and Boglehead on. KCBO.

Post Reply