COFI loans - Posted by Joel

Posted by Ben (OH) on September 07, 2003 at 16:06:46:

cost of savings index. you can google it for more info, since I won’t do it justice, but I understand it to be what you earn on your interest-bearing checking and like returns from banks.

COFI loans - Posted by Joel

Posted by Joel on September 04, 2003 at 10:43:15:

Does anyone have any experience with these? It has super low rates (2% ish) which sounds great but I just want to be fully aware of the potential downside…seems a little too good to be true kind of thing.

Thanks in advance!

Re: COFI loans - Posted by GregNY

Posted by GregNY on September 04, 2003 at 13:35:34:

try this:

http://mortgage-x.com/library/cofi_arm.htm

Re: COFI loans - Posted by Ben (OH)

Posted by Ben (OH) on September 04, 2003 at 13:19:21:

I posted a similar question a few weeks back, for the same reasons, I think. From what I can tell, the downsides are that the index is at historical lows and I think it’s a monthly ARM, so your rate could rise quickly. I would go out and look up historical COFI trends and numbers and get comfortable with where the rate was only a few years ago to see what that kind of increase would do to your payments at adjustment time. You can just search google on COFI and click around. I still think this could be viable for a short loan term, and though no one can predict where we’ll go, I think we’ll be pretty stable for a few months at least. If you’re going to flip it within a year or two or put it out on L/O, then it could be ideal and I think I read there’s a risk of negative amortization under certain circumstances, which is ok if you’re ok with that prospect and have enough spread between sales and purchase prices to absorb that (or disciplined enough to stash away the cash flow prior to selling). The other ultra-low rate is COSI-based, and that one seems to be averaged over 12 months, so the stability for a longer time can be better.
Again, we’re at the bottom for rates–and IMHO, they’ll go up soon, a question of when and by how much. I hope others who’ve used these loans will still chime in since I’ve just kicked tires and not used these loans myself.

Re: COFI loans - Posted by Dave T

Posted by Dave T on September 05, 2003 at 23:36:50:

And COSI stands for???