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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

banker0679 · Posted: Tue Jan 08, 2008 2:50 pm Post subject:

what is the value of the home? and your credit score?
if the ltv is 95% and your score is 680+...you may have a better rate with LPMI for 30yr fixed.

COSI sounds like Option ARM...which means that you're paying 2.9%...but the real rate is around 7-8%. The extra 4-5% is going towards your principal which making your loan amount higher throughout the months/years

michelle · Posted: Tue Jan 08, 2008 7:43 pm Post subject:

Welcome to the forum Lashuan,

Banker is correct when he describes this product as an option arm type loan. Although your minimum payment will be 2.9 the fully indexed rate (actual rate you are being charged) will be closer to the 7-8% range. It is called a COSI loan as the index used is the Cost Of Savings Index which is much less volatile than some other indexes for arms. If you were to make only the minimum payment, your loan balance would actually increase just as banker described.

We really do not have enough information to tell you which loan is best for you. The COSI loan is a great loan product for many people but also a very poor choice for others.

If you have a mortgage professional already quoting this program to you, please ask them for more information or seek out one of the community lenders here. I think you might want to have some other refinance options to choose from before deciding.

Let us know if you have any other questions.

jenkin7 · Posted: Wed Jan 09, 2008 3:37 am Post subject:

Hello Lashaun,

I have already replied to your query here at http://www.mortgagefit.com/discuss/cosi-4.html

Kindly have a look at it.

gmakerley · Posted: Wed Jan 09, 2008 8:16 am Post subject:

i am in agreement with the advice noted above. please be wary of anything that ever sounds like it's too good to be true. consider the old adage that tells you it probably is too good to be true.

you didn't elaborate on the soft second, but my presumption is that you do not make payments on that, and that it will be forgiven at some time in the not too distant future. if that is so, then you are likely pretty well off at the moment and refinancing (unless you truly need to) seems like an unnecessary move.

ezmortgageloanz · Posted: Wed Jan 09, 2008 6:36 pm Post subject:

What your lender/broker isn't telling you about the COSI Option ARM is if you continue to pay the min. payment based upon 2.9%, the excess interest (called deferred interest or negative amortization) will be added to your mortgage amount.

These loans are not meant to be used to stretch affordability (which sounds like your main objective) and I strongly advise you to consider another option.

Regards,

Scott Miller

lisascherzer · Joined: 04 Jan 2008 Posts: 755 1.12 Dollars($)

I would not take the COSI Loan. That is an option arm based on the COSI index. You will not pay it off quicker than a 30 year fixed because the rate will be at least 7 or 8% and even more. This type of loan has an interest rate that adjusts monthly! If the person that you are working with is telling you that you will pay your house off quicker than a fixed rate mortgage, run. Seriously, there are too many loan officers out there that only try to sell the option arm mortgage because they can make more money. From what I am hearing, I don't believe they have your best interest at heart and are not being straight with you on this COSI option arm mortgage.

I suggest looking at a 30 year fixed rate. Right now you can get a fixed rate at 5.5%. You can even look into a fixed rate interest only mortgage if you want to reduce your payment obligation. I would suggest comparing mortgage programs with someone that can give you the pros and cons of each and won't "sell you" on one type of program.

lisascherzer · Joined: 04 Jan 2008 Posts: 755 1.12 Dollars($)

Want to add to my message.

You should not deal with a loan officer that is telling you the the interest rate is 2.9%. This is only what the minumum payment is based off of. If you make your minimum payment, you will have about 1,000 in negative amortization per month since the actual interest rate is much higher.

If you choose another program, I suggest going with someone else that doesn't lie to "make a sale". Loan officers like that just don't deserve the business.

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