Posted by James Strange on September 04, 2003 at 19:37:36:
COFI is an index as is LIBOR. Your loan is a negative amort loan. Rates have been going up if they cotinue to go up your rate will go up every month but your payment will stay the same.
Your rate will beased on the Index if the rates on that index go up so does your rate. Lets say that you do this today and rates continue to go up at the end of the first year your rate will be 9.35%. Then next year your rate will max out at 11%. (These are based on the info that you have provided.)
So in a very short time you could be at 11% and owe more on the property than what you paid. What a deal!
But if rates go back down you will have a very low rate. But are you willing to take the risk?