| Learn The Advantages Of A COFI Loan Over A Fixed Rate Mort. |
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JessicaLender
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| Learn The Advantages Of A COFI Loan Over A Fixed Rate Mort. |
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* Better Cash Flow- Save thousands of dollars in payments!
* Re-Amortization- Benefit immediately when extra cash is applied to the mortgage!
* Options- Think of the ARM loan as a Master Card and the Fixed Rate loan as an American Express Card!
* Financial Tool- Use cash flow payment savings to invest in high yield savings plans or to pay off credit card debts.
* A COFI loan is a very conservative loan in today's market. Its payment cap assures that your loan will always be affordable.
While COFI loans are among the most poorly understood mortgages, don't let a lack of knowledge about them scare you away from what may be a compelling choice for your financial situation.
The goal of the COFI loan is to provide the borrower with a mortgage that will give more options than the traditional mortgage. It offers homeowners options that will allow them to invest more each month, pay off debt, or simply build equity faster. COFI also has extra features, which helps resale and provides added security. The COFI loan has the lowest foreclosures rate in the country.
Selecting a mortgage may be the most important financial decision you will make, and you are entitled to the information you need to make the right decision. Don't hesitate to ask questions.
Jessica Elia
(718)356-3444 Ext. 244
(718)619-3063
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Thu Oct 06, 2005 4:58 pm |
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Rolo
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Okay, the subject of this post is "Learn The Advantages Of A COFI Loan Over A Fixed Rate Mort." but I don't see any text to that end. How does a COFI Loan work?
"Expect me when you see me."
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Fri Oct 07, 2005 12:21 am |
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JessicaLender
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It couldnt fit i would have to e-mail the rest to you.
Jessica Elia
(718)356-3444 Ext. 244
(718)619-3063
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Fri Oct 07, 2005 4:36 pm |
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Rolo
Yo' Daddy
Cash: $ 309.70
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Location: Colorado/Florida
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quote:
Originally posted by JessicaLender
It couldnt fit i would have to e-mail the rest to you.
Use multiple posts...how big can the explanation be?
"Expect me when you see me."
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Fri Oct 07, 2005 8:49 pm |
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bong12187
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quote:
Originally posted by JessicaLender
It couldnt fit i would have to e-mail the rest to you.
Hahahaha.... Tsk, Tsk, Tsk... Jessica, Can you please tell our readers who have good credits and are able to get good financing why would they want to get a COFI loan? COFI loan doesn't make sense if you have good credit. Tsk, Tsk, Tsk....
COFI Loans
When interest rates move higher, many borrowers to look for loans that offer an alternative to higher-priced fixed-rate mortgages. Until recently, adjustable-rate mortgages (ARMs) have provided a viable alternative. ARMs could save a homebuyer a significant amount of money at least for the first several years, compared to fixed rates. Traditional ARMS had been tied to one of several Treasury Indexes. Unfortunately, these indexes did not fall as fast as fixed rate mortgages in recent years and they have fallen out of favor
This has created a void for borrowers seeking a lower rate and payment for the first few years. Jumping back on the scene in an attempt to fill the void is the cost of funds index or COFI loan. This type of mortgage isn’t new but it has been gaining popularity recently. Also, there are quite a few competing indexes which are detailed in my Adjustable Rate Mortgage section.
COFI loans have a very low starting or "teaser" rate, typically for the first one to three months. The loan rate then becomes a combination of the chosen index and your margin.
COFI loans give clients a sense of security because the minimum payment changes annually. Each year the monthly payment can only increase by 7.5 percent of the previous year’s monthly payment.
This is where confusion sets in.
While the minimum payment remains the same for the first year and can only increase gradually each year thereafter, the actual interest rate can climb higher based on what the index is doing. There is an important difference between the amount of the payment and the amount being charged as a result of the actual interest rate. If the rate of interest is higher than the amount being paid in the minimum payment the difference is added to the principal balance.
This is known as negative amortization. Someone borrowing 200,000 and making their minimum mortgage payments for two years, could find their mortgage debt has swelled to $215,000 rather than reducing it to $197,000. However, this type of loan gives you a great deal of flexibility in that you have four choices every month on how to repay the loan. Minimum Payment, Interest Only, 30 year fully amortizing, and 15 year fully amortizing.
Often times the cost of funds index may be sold or publicized as an index that is less volatile than ARMs pegged to one-year Treasury bill yields (the normal structure for most ARMs) because it lags behind the one-year Treasury bill. This is another reason to steer clear of COFIs. If interest rates have risen significantly they may now be peaking. Therefore, the index on the COFI loan will probably continue to rise long after interest rates on other mortgages decline. Another issue I have with COFI loans is that their index is made up from the cost of funds index for the 11th District of the Federal Reserve system located primarily in California. Did you know that there are only 2 large national lenders currently offering COFI? Did you know that one of these 2 mega banks owns 62% of all the banks that make up the 11th District? It really scares me when a lender has such control over the index and I no longer recommend them. A much better choice is either the LIBOR or MTA index and they are detailed in the adjustable rate mortgage section
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Sun Oct 09, 2005 5:49 am |
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Rolo
Yo' Daddy
Cash: $ 309.70
Posts: 1552
Joined: 13 Mar 2005
Location: Colorado/Florida
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Thanks, Bong!
That wasn't so hard.
"Expect me when you see me."
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Sun Oct 09, 2005 6:03 am |
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ushomeloans
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Location: Sacramento
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that is great that the guy named Bong is delivering.
Pay option arms are good for certain ppl
Self employed with varied incomes
Seasonal workers
Real estate investors
and probably a hand ful more.
For people who want to buy more house, NO. See too often people who get stuck in them with the high early closure cost.
hope this helps
Thanks,
Chris Kemp
US Home loans
chriskemp@us-homeloans.net
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Mon Oct 10, 2005 11:02 pm |
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Rolo
Yo' Daddy
Cash: $ 309.70
Posts: 1552
Joined: 13 Mar 2005
Location: Colorado/Florida
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Yeah, that guy named Bong is also a real estate investor. 
"Expect me when you see me."
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Tue Oct 11, 2005 12:02 am |
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jlee1224
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Location: Baltimore
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Danger: NEG-AM loan.
A negative amortization loan isn't bad by definition, but it can be tricky if you do not know what is going on. You can easily find yourself owing more than the house is worth in 5 years, and if you want/need to move, you'll find yourself paying out of pocket to clear the debt.
Much like a variable or an interest-only loan, this might be good for someone who knows they will only live in the house for a short time, or knows their income will significantly go up in 3-5 years. I would not say this is a comparison to a 30 year fixed.
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Tue Oct 11, 2005 2:48 pm |
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