ING Direct is paying high interest on savings (currently 2.4%) and using the money to make mortgage loans. ING Direct calls their mortgage the Orange Mortgage. It is a thirty-year adjustable rate mortgage with an initial fixed period of 5 or 7 years. The current rate is 4.681% on a 5/1 adjustable rate mortgage, which is cheaper than most 30 year fixed rate mortgages.
It is definitely a good deal for the first period of fixed rates. ING Direct mortgages have an unusual option. For $750 you can lock your rate again during the first fixed rate period for an additional 5 or 7 years. ING Direct does not have 30 year fixed mortgages since most people do not keep their mortgages that long. The interest rate is based on the LIBOR rate, plus a margin. The interest rate can adjust up or down a maximum 2% each year after the fixed period expires. The interest rate on an Orange Mortgage could go up a maximum of 6% over the life of the loan. Closing cost are less than other mortgages, because ING Direct has fewer fees. There are no points and PMI (Private Mortgage Insurance) is not required. The interest rate is limited to a maximum increase or decrease of 6% over the life of the loan. A down payment of 20% is usually required; you can talk to ING Direct’s Mortgage Associates about covering part of the amount with an Orange Home Equity loan. They also offer a mortgage called the Easy Orange, which is only available on your primary residence, has bi-weekly payments instead of monthly payments, requires a 25% down payment,
As an internet bank, ING Direct has some interesting options. If you are refinancing your home or getting a home equity loan, you can have an electronic closing, which means you can close from your own home. They do not put your taxes in an escrow account and pay them for you. They recommend you open an ING Direct savings account, set up automatic deductions to transfer the money you will need to pay your taxes into that account, and earn interest (currently 2.4%) on the money instead. You can also set up an Automatic Payment Plan for the mortgage itself.
You can apply for an ING Direct Orange Mortgage online or over the phone. ING Direct will send you information about the loan amount, interest rate, and payment terms, and a letter asking for the documentation they will need to process your loan. After you accept the loan, the rate will be guaranteed for 60 days on purchases or 30 days on refinances. You will have to pay a $350 fee if you decide to cancel after you accept and ING begins processing your application.
ING Direct does not offer mortgages on all types of properties, such as rentals, mobile homes, or unimproved land.