COFI Option Arm pros and cons? - Posted by Earl

Posted by Ed Garcia on February 11, 2001 at 19:36:04:


Again, it depends on what you want to do? You could do a loan consolidation paying off all of your bills, lowering your monthly payment, and can write the whole thing off. If you need extra money down the road for investment, then what I would do is refi now, and then get a credit line for the difference. That way I’m only paying for the money as I use it.

I would need more detail on what you would like to do Earl, but this was just a little food for thought.

Ed Garcia

COFI Option Arm pros and cons? - Posted by Earl

Posted by Earl on February 11, 2001 at 17:14:51:

I am in the process of refinancing my residence and the lender told me about their 1-month COFI Option Arm program, that they have in addition to their regular fixed rate loans. Can anyone with experience with Cofi Option Arm, provide me with some information about it? The loan consultant at Washington Mutual said he has an Option Arm himself, but he could be just saying that, to entice me to get one from his company. I also contacted another mortgage broker and asked him about the Cofi Option Arm and he said, that I should stay away from the Option Arm because I could have a negative amortization and to get a fixed rate loan from him.

I do not intend to stay in my home more than 1-2 yrs, so I plan to sell it on a lease option after I move out at that time.

Any advice would be appreciated,


Re: COFI Option Arm pros and cons? - Posted by Ed Garcia

Posted by Ed Garcia on February 11, 2001 at 18:19:23:


That loan is one of, if not the hot loan, that Washington Mutual sells.
It’s four loans in one.

Personally, I’ve always felt that if rates were up, I’d go adjustable; when they’re down, hook on to a fix. However, you’ve mentioned that your intentions for the property, is to sell it in 2 years. You mentioned that you plan to sell on a lease/option at that time. I don’t know why you’ve predetermined selling in that manner at this time.

With financing so available today, there is no reason to do it. You’ll have underlying financing in you name, hindering your borrowing power. If you go a lease/option, you’ll get full price, but a less quality buyer. Your buyer has already proven that they don’t pay their bills. That statement was not meant to be one of moral judgment, but to be more of a “tell it like it is”, statement.

In any event, if I were going to do a lease/option as you mentioned, then I would do a fixed. I need a constant loan, loan balance, and payment to work from and carry forward in the execution and completion of my sale.

Unfortunately Earl, were talking hypothetically, because we don’t know what your next deal will be and to who. I do know that Washington Mutual uses as a selling point of their loan, to let the next buyer pay for you negative equity position. They’ll tell you that you’re just giving up future equity, don’t buy it. You need to have versatility in the event you should change your mind. You not going to be a happy camper if rates go up and you’re stuck in a high yield loan, or experiencing a negative equity position when you didn’t have to.

Ed Garcia

Re: COFI Option Arm pros and cons? - Posted by Earl

Posted by Earl on February 11, 2001 at 18:41:50:

Okay Ed, I may just the home outright in a year or 2 and forget about the l/o. So, in this case a fixed rate refi loan should be the way to go then? What if I wanted to take the extra cashflow and pay down other credit card, car, and student loan debts. I know I could also invest the extra money and make more on my money than I am paying on the mortgage.