Pentagon Federal Credit Union has rolled out a type of product that was popular during the housing boom, but out of favor the past few years: a hybrid adjustable-rate mortgage.
The Alexandria, Va., credit union's offering has a fixed interest rate for the first five years and adjusts by no more than 2 percentage points every five years after that.
The 5/5 ARM is available as a conventional, jumbo ($417,001-$750,000, or $625,501-$750,000 in Alaska and Hawaii) or super jumbo ($750,001-$2 million) mortgage in all 50 states and at the same rates.
"There are a few unfortunate misconceptions circulating out there involving mortgage lending," said Amy Doane, a spokeswoman for Pentagon Federal, which serves military, government and defense contractor personnel and veterans. "The first being that no one is offering jumbo mortgages and the second, that there is no adjustable-rate mortgage available in the marketplace that is beneficial to the borrower."
