COSI Loan-A type of ARM based on cosi index rate

Hi Andrew,

I would like to share my knowledge on COSI loan.

COSI (Cost of Savings Index) loans are adjustable rate mortgages having interest rates which are based on changes in the COSI index. These loans have various payment plans like the minimum payment, fully amortized payment, 15 year payment, bi-monthly payment and the interest-only payment options. These loans are assumable mortgages. They require less points compared to other conventional mortgages.

Thanks,
Jerry

Hi Andrew
Welcome to MortgageFit forum.

Jerry has indeed given useful information on COSI loans. But let me add some more details.

The initial rates for most COSI loans are below 2% and it takes almost 5 years for these loans to increase to a fully indexed rate. The COSI loans have a low annual payment cap.

If a down payment of 20% to 25% is made on COSI loans, then the borrower may not have to submit proofs of his income, employment and assets along with the loan application. Such mortgages are termed as no-documentation COSI loans.

Hope this information will help you further.

Regards,
Jessica.

Thanks jerry and jessica for providing me with such useful informaton.

I saw jerry using this term COSI index;can you please tell me what does this mean.

Thank you once again.
Andrew

Hi Andrew
Welcome to the forums.

COSI index is the weighted average of the interest rates that are charged on the checking accounts, savings accounts and certificate of deposit accounts of federally insured depository institutions under the Golden West Financial Corporation. The institutions under this corporation operate under the name of World Savings. This index does not fluctuate as often as other indexes related to adjustable rate mortgages.

The interest rates charged on COSI loans are in accordance with the COSI index. The COSI indexed rate adjusts every month and is determined on the last day of each month. The rate is then announced on or near the last business day prior to the 15th day of the following calendar month.

Most ARMs with COSI indexed rates have lifetime interest rate cap of about 12%. But these generally have no periodic interest rate caps thereby resulting in negative amortization. The COSI is one of the slowest fluctuating rates associated with adjustable rate mortgages. The option ARMs widely use the COSI index.

Hope you will be benefited from this information. Please feel free to post further queries.

Regards,
Caron.

COSI loans offer you the flexibility while qualifying for a loan, thereby putting you in control of your finances when you start making payments. Monthly payments entirely depend on the interest rate. We provide you with a list of COSI rate for the last 1 year.

IF YOU HAVE A FIXED RATE OF 5.87 ON A 30 YEAR MORTGAGE IS IT WORTH TO RE FINANCE ON A COSI LOAN TO LOWER YOUR MONTHY PAYMENTS. WE ARE NOT KEEPING THE HOUSE PAST 7 YEARS.

Hi Orlando,

I think the option you thought of can have more risk effect compared to getting a help with the change.

Your lender should be able to provide you with all the information on how the rate is calculated and a way to track any change in the rate, before you actually take a COSI indexed mortgage.

I will suggest that if you can afford and need an ARM for lowering your repayment, then you can go for an interest-only hybrid ARM like a 5/1 or 7/1 ARM.

Hope I could help you with the information.

Regards,
Blue

Hi! Thinking about refinancing again in 5 to 7 years. B of A offered us a fixed rate of 6% for a 30 yr. jumbo loan. World Savings which we have right now on a CODI has a prepay of $8000.00 dollars offered us a COSI and waiving the prepay. Should we go for it? Thanks
Rose

Hi Rose,

If you ask me then you can take the 2nd option. Looks ok to me.

Niicss

Hi Rosy,

Welcome to MortgageFit Forums.

I agree with Niicss. You can take the offer. COSI is a unique loan with the most stable index in America. The COSI index has been quite low and stable and it does not depend on the fluctuating economy.

The prime rate doesn't affect the COSI index. These loans can be considered as very much stable since the Credit Unions and banks haven't increased the interest rates on what they pay back to the consumer substantially.

Another advantage is that, it offers you the most flexibility, while qualifying and you never lose control of your finances, when you go for the repayment.

So, I would suggest you to go for it.

God bless you.

For MortgageFit,
Samantha

I am really concerned and can't decide if I should stay with my current COSI bi-weekly loan, or convert to a fixed rate. COSI is currently 5.62% (I have a 2.65 margin with a 11.95 cap - that cap scares me!!) whereas I can convert to a fixed @ 6.76 for $500.00 fee w/no add'l closing costs and don't have to start my loan over......I am so torn, I get advise of all sorts from everyone. Please, be honest and tell me, from a consumer point of few, what makes the most sense. I plan on being in my home for atleast another 10 years and my goal is to have it paid for in the next 15 - that is why I opted for bi-weekly payments in the first place. I have paid off over 6,000 in principle in the first year.
Thanks - Pam

Hi Pam

If you ask me about this situation, If i could have been your place, i should have opted the fixed rate option.

Interest rate looks to me is on a jumping curve and if you are planning to stay long, go for fixed rate PAM.

God will help you.

Andy

You answered my prayer - your reference to God sealed the deal - I am going to fix my rate tomorrow. May God bless you too Andy!

Pam

Hi Pam,

I agree with Andy absolutely. The Federal Reserve has raised the interest rates for the 12th consecutive time and it is likely to go for 2 more rate hikes this year. The rates on various mortgages are getting higher and so it is better to go for a fixed rate rather than a COSI loan, which has a variable rate. Although the initial rate on your COSI loan is lower than that of the fixed rate mortgage, yet the cap seems to be high enough and you may have to pay a large amount of interest with more rate hikes in near future.

But with a fixed rate loan, you may have to pay comparatively greater interest at present but at least you have the assurance that you will not have to pay higher interest during your loan period. With a fixed rate mortgage, you know how much you have to pay monthly and can thereby move on according to a planned budget which is necessary in this phase of rising rates.

So do not get worried. Get relaxed and proceed further.

My best wishes are with you.

Regards,
Jessica.

i wasn tricked into a pick a payment codi loan last year. after watching the rates tick up, i called world savings and they gave me a 1 year fixed of 5.5%. but next year, i'll be back in my codi loan. i called about a fixed rate loan, but was advised to keep my current fixed rate and get a cosi loan next year. is that a smart move? or should i bite the bullet (and the $6,300 prepayment penalty) and refinance now? my mortgage payment will go up by roughly $500 monthly