Posted by Mark (SDCA) on March 29, 1999 at 11:07:01:
COFI loans are adjustable loans tied to the Cost Of Funds Index (basically what the bank has to pay to get the money).
I like adjustables if I plan to exit the property soon (eg a rehab) and not keep the loan. If I plan on keeping the property, I prefer fixed loans. That way, I know what my mortgage expense will be. I just don’t like betting on the direction and magnitude of interest rate moves. As for whether taking over the payments is a good idea, it depends on what the current rate is, when and how much it will adjust next, what you plan on doing with the property.
Hope this helps,