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

Guest

I currently have a mortgage for 30yr fixed with 7.250 Int my payments are very high, I need refinance or I will be heading for foreclosure. a lender is offering a 30yr type cosi loan int 1.95, I am very confused is this a good choice. Thanks

adonis · Posted: Mon Jun 11, 2007 9:30 am Post subject:

Nery,

The community has discussed on this issue at http://www.mortgagefit.com/refinance/arm-cosi.html . Please go through it and if you have further query, you can always come up with it.

Guest

I am in a very high fixed rate I am looking at a cosi loan beacause my credit score is not there and the interset rates today are over 7%. any advice

miller_st · Joined: 17 Jan 2007 Posts: 917 168.92 Dollars($)

Guest

can someone tell me about the Wachovia COSI?

Niicss · Posted: Fri Aug 31, 2007 6:03 pm Post subject:

After merger of World Savings & Wachovia, the Wachovia family of companies stopped using the original COSI index for new mortgages.

The basis for this index is the interest rates that Wachovia pays on certificates of deposit (CDs). It is calculated monthly & is based on the weighted average of interest rates paid on CDs held by depositors as of the last business day every month.

As CD rates normally tend to move slowly compared to market interest rates & as W-COSI is made up of portfolio of such deposits having different maturities, the W-COSI lags when market rates move up or down.

Guest

I am a single parent with a 225,000 loan on my home with a 6.65% on my first loan and a 8% on 30,000 soft second. I have the option of refi both loans together at a 6.5% or a COSI loan at 2.9 for 10yrs then go up to 8%. I figure if I go with the Cosi and pay what I am currently paying, my house will 75% be paid off in the 10yrs.

With the market being the way that it is andthe fact that I am the only income coming in. Which option sound more safe for me and my family.

Thanks

jenkin7 · Posted: Wed Jan 09, 2008 3:21 am Post subject:

Hello Lashaun,

I think it will be better if you go for a refinance at a fixed rate because with a COSI loan you might face a interest risk throughout the loan period. It might appear attractive at the beginning but I guess it's always better to lock the interest rate if you are considering a long term.

evolovik26 · Posted: Wed Jan 09, 2008 7:03 am Post subject:

There is no such thing as COSI loan. COSI is a rate index.( a variable indicator based on certain economic factors) What you'll be getting is an Option Arm which will have a minimum payment rate based on 2.9% interest. Your actuall rate will be much higher. And if you pay minnimum payment any unpaid interest will be tacked on to your principle balance. Not only that but the minnimum payment will increase each year up to your fully Adjusted rate.
Bottom line is there are few situations when an option arm can be a better choice then a conventional loan but the fact that you are completely missinformed on the subject tells me 2 things, this is not one of thouse situations and your broker is a crook.
By the way if you qualify for a conventional loan you should be getting an interest rate of no more then 6%.

Jessica

Hi Lashaun,

If the 6.5% loan is a fixed rate mortgage, very well go for it. Taking an ARM based on the COSI index isn't a good deal for you.

Since you are the only person earning, I would suggest you look for options where there is less risk involved. By risk, I mean a loan program wherein you can make payments and there would be no chance of default due to rate hikes and the like.

Though the COSI is one of the most stable indexes, yet it will be an Option ARM altogether and there's every chance of negative amortization which is likely to increase your loan balance. So, considering this, and reviewing your situation, I would suggest that you go for a fixed rate loan.

Regards,

Jessica

lisascherzer · Joined: 04 Jan 2008 Posts: 755 1.07 Dollars($)

The fixed rate is the way to go right now. If you have good credit, you should be able to get a rate of about 5.5%

lisascherzer · Joined: 04 Jan 2008 Posts: 755 1.07 Dollars($)

Hi lashaun,

The payment is based on 2.9, NOT the interest rate. This is another clear case of someone presenting you with wrong information. I would run from that lender that is telling you that your interest rate is 2.9% when in fact it will be an adjustable rate mortgage with a rate of at least 7% and probably closer to 8 or even 9%.

There are too many people that got into this mortgage based on the same things you are stating that were told to them by their loan officer that just were not true and are now regreting it.

shayneroy · Joined: 12 Nov 2007 Posts: 51 21.08 Dollars($)

Hi Andrew,

With all the amazing insights that has been already given to you, there is nothing more really that one can add up to the technicality of the COSI / Pick -a - pay loan. However, I would like to keep you posted on a few things which has not been discussed:

Good Luck!

sara · Posted: Mon Feb 04, 2008 11:36 pm Post subject: RE: paick-a-pay payment options

Shaneroy,

I personally feel that a pick-a pay is ok if it involves the interest-only or 30 year amortized payment. But the minimum payment option is just a bit tough to handle because of it's negative amorization feature. I mean who doesn't want to pay off a loan faster instead of piling up the debt day by day.

Posted: Wed Feb 06, 2008 9:07 am Post subject:

Sara,

I concur with you.

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