For example, Pentagon Federal Credit Union in Alexandria, Va., is offering its 1.2 million members a new 15/15 adjustable rate mortgage. It boasts a lower interest rate than 30-year fixed-rate loan, and the rate won’t change for the first 15 years. After that, it will adjust once, thereby setting the new rate for the final 15 years of the loan.
“This is an excellent opportunity for anybody who doesn’t think they’re going to be in the same house for 15 years,” says Craig Olson, Pentagon’s senior vice president of mortgage operations.
Another credit union, Redwood Credit Union based in the Bay Area of Calif., is offering a 5/5 ARM that adjusts only once after the five years. The rate remains fixed for another five years then. The rates also tend to be better than the 10/1, says Cynthia Negri, the chief lending officer.
One of the nation’s largest credit unions, Navy Federal, is offering its more than 4.5 million members interest-only loans, which include a set term where the borrower only pays interest on the principal balance. Navy also is offering the Homebuyer’s Choice Program, which is a program that offers 100 percent purchase financing.
“We have a lot of young, first-time buyers, and this is great for someone who’s not eligible for a Veterans Administration loan,” says Katie Miller, the vice president of mortgage lending.
Source: “Credit Unions Offer Creative Home Loans,” The New York Times (Feb. 27, 2014)
