COFI stands for Cost of Funds Index.
It reflects the interest rate paid by 11th Federal Home Loan Bank District savings institutions. The 11th District represents savings institutions headquartered in Arizona, California, and Nevada.
Why would I want a COFI Mortgage?
You may want a COFI Mortgage if you want a mortgage that slowly reacts to its market. A COFI Mortgage is an ARM that is tied to the COFI index. COFI is a slow reacting index because it is based on interest paid on savings accounts. Its slow reaction period is beneficial to you if rates start to rise, but hurts you if rates are falling.
What can I use a COFI Mortgage for, and what are my options for a COFI Mortgage?
You may want to consider a COFI Mortgage if you are looking for a safer Adjustable Rate Mortgage. If your ARM is indexed by COFI you will still have the benefits of interest rates that follow the market, but since COFI changes at a slower rate, the risk factor is lower. Besides the 11th District COFI, there are the National Monthly Median Cost of Funds and the Federal Cost of Funds Indexes.
Why should I get a COFI Mortgage?
COFI Mortgages are the most stable and slowest moving of all ARMs. It smoothes out a lot of the volatility in the market, ultimately making it a more stable ARM.
How can I get a COFI Mortgage?
If you are interested in a COFI Mortgage you can fill out an application right now. Click here to begin.
How can my FICO/Credit Score effect my mortgage rate?
Your FICO and Credit Score are essential to determining your mortgage rate. If you score between 720 and 850 you are in the A-paper range and have very little to worry about. Many lenders will not lend to borrowers with a score below 660. The cutoff score between A-Paper and Sub-Prime or Non-Prime lending is 620.
More tidbits about COFI…
- COFI is the most popular of Adjustable Rate Mortgage Indexes.
- COFI generally follows market trends, it can also move in the opposite direction.
- COFI lags by about two months.
Q: Do COFIs still have payment caps?
A: Most COFIs have payments caps, but not periodic interest rate caps.
Q: Do I have to worry about Negative Amortization with COFI?
A: COFI does not exclude the possibility of Negative Amortization.
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