PenFed Mortgages Reviews

PenFed Mortgages doesn’t publish starting mortgage rates on its website, but you can get rate estimates by filling out an online questionnaire. In recent years, its rates for home purchase loans were competitive and lower than the national averages (in 2020 and 2021), according to data from the Home Mortgage Disclosure Act.

Mortgage rates vary by lender. They’re calculated using factors like the current state of the economy, Federal Reserve rates and the real estate market. Your personal finances and the location and cost of the home you’re purchasing also affect rates.

PenFed Mortgages has fixed-rate and adjustable-rate mortgages (ARMs). A fixed-rate home loan has the same interest rate for the life of the loan, and the most common fixed-rate mortgage terms are 30 years, 20 years and 15 years. An ARM usually has an introductory interest rate, then the rate changes periodically. For example, a 3/1 ARM will have a fixed rate for the first three years, then your rate will change every year.

PenFed Mortgages average home purchase rate vs. national average

PenFed Mortgages has an online mortgage application, or you can apply in person or on the phone. You can also upload documents online and check the status of your application on the website or through the mobile app.

You’ll need to provide proof of your income and assets, employment verification and credit score information. When you submit your final application to PenFed Mortgages, it will also require W-2 statements, complete bank statements, investment and retirement account statements, recent pay stubs and a copy of the purchase agreement for the property. Usually two months of statements are sufficient.

If you’re happy with the rate the company offers you but you haven’t found a home yet, PenFed has a rate lock to secure the interest rate for 45, 60 or 90 days.

PenFed Mortgages application features

PenFed Mortgages originate many types of home loans, including VA, FHA, conforming conventional and jumbo loans. It also offers refinancing and home equity lines of credit (HELOCs). It has both fixed and adjustable rates.

VA and FHA mortgages are backed by the federal government and geared toward first-time homebuyers and borrowers with lower credit scores who can offer little to no down payment. Conventional (including jumbo) loans don’t have government backing and usually have more stringent credit requirements and down payment minimums. PenFed offers conventional mortgages up to $647,200 and jumbo loans if the amount exceeds this limit.

In 2021, PenFed received 12,917 home purchase applications. It closed on 7,439 (about 58%) of these and denied 1,558 (about 12%).

Loan applications for home purchases only by year

Refinancing

In 2021, when interest rates were at historic lows, PenFed Mortgages closed more refinance loans than home purchase loans. Now, as interest rates are rising, the number of people refinancing is likely to go down. There are several reasons you might refinance, including to:

• Lower your interest rate
• Reduce your monthly payment
• Change from a variable-rate to fixed-rate loan

However, there are closing costs to take into consideration. It’s important to look at the overall cost of refinancing over the life of the loan. PenFed has a mortgage calculator that lets you run various scenarios to see what’s right for you.

Home purchase vs. refinance loans by year

HELOC and home equity loans

PenFed Mortgages offers a home equity line of credit (HELOC), which is a line of credit against the equity in your current home. It’s different from refinancing, and you don’t need to sell your home to access the equity.

A HELOC can be used for home improvements, debt consolidation or other expenses. There is usually a draw period (where you can use the allocated funds) and a repayment period. A HELOC does require putting your home up as collateral.

Mortgage lenders have varying requirements for borrowers. They look at your credit score, debt-to-income ratio and how much money you have for a down payment. This information helps them determine how much house you can afford and assess their risk in lending you money. Government-backed loans, like FHA and VA loans, have less stringent requirements than conforming conventional and jumbo loans.

As of publishing, PenFed’s credit score requirements may be a bit higher than the industry minimums, at a preferred 650 for conventional and preferred 620 for FHA loans.

For a conventional loan, you’ll have to put down at least 3%, though putting less than 20% down can mean paying private mortgage insurance (PMI). This doesn’t apply to VA loans, however.

National mortgage requirements by type

For other loan types, see our guides on home equity, USDA and jumbo loans.

PenFed Mortgage advertises that it doesn’t charge lender fees for some mortgages. Origination fees are usually about 0.5% to 1% of the loan amount, so this can mean big savings. Other closing costs may include the appraisal fee, attorney fees, real estate taxes and PMI. In total, closing costs for a home purchase may add up to 2% to 5% of the loan amount.

The company has a closing cost estimator tool on the website. You will also receive a Loan Estimate about three days after you submit your application, which will provide an estimated breakdown of these costs.

PenFed Mortgage does offer a lender credit for approved home loans to help offset the cost of getting a mortgage. The credit ranges from $500 to $2,500, depending on the borrower’s loan amount.