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COSI loans?

Posted on: 14th Apr, 2006 10:34 pm
:?: COSI loans ?? Is the principal increasing in this kind of loan, even If I choose a biweekly payment (interest + principal). Please help
Well! as far as I know if you opt for biweekly payment then it will help you to reduce the principle loan balance and pay off your mortgage faster.

Posted on: 14th Apr, 2006 11:06 pm

Welcome to our Forums,

The principal won't be increasing; rather it will decrease with every extra payment that is included in your bi-weekly payment plan. Your loan balance will reduce and hence the interest which is to be calculated further on that balance will also be lowered. You can easily pay off the loan faster. But have you asked the lender if you will have to pay any prepayment penalty?

Anyway, if you are interested to know more on COSI loans, please visit the referred section.


Posted on: 14th Apr, 2006 11:12 pm
If you are going to do a COSI option ARM and you make the minimum payments even on a bi-weekly program your loan will still more than like go negative but not as much as if you made a monthly payment. You do ALWAYS have the option of making an IO payment so the loan doesn't go negative.
Posted on: 15th Apr, 2006 10:23 am

I think Cedric is right. It is true that with a COSI Option ARM, when you choose the minimum payment plan, you actually increase your loan balance since you pay lower interest and so lower monthly payments.

On a bi-weekly plan, you are likely to increase your loan balance but that won't hurt as much as the monthly payment. This is because in a bi-weekly plan, you are actually making half the monthly payment every 2 weeks. So the pay off is faster and the total interest is also lowered.

God bless you.

For MortgageFit,
Posted on: 15th Apr, 2006 11:08 am
It really depends on the MARGIN, this is the one thing most people do not take into account. The COSI may be low but by the time you add the margin, the rate for the loan from the second month on is usually 8%. The worst part is the higher the margin your mortgage broker gives you the more they get paid. Ask about the margin, add the margin and the COSI together and ask yourself if you want to pay that rate!

Your payment might be capped on this loan but the rate is not. The second month you go to a fully indexed rate and you will go negative if you make the minimum payment.
Posted on: 16th Apr, 2006 03:31 pm
Thanks for all the information.......Regards to everyone..
Posted on: 02nd Jul, 2006 08:39 pm
Hi Claudio,

Welcome again.

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Posted on: 02nd Jul, 2006 09:11 pm
We are considering consolidating all our debt into a cosi loan which includes our mortgage equity and credit cards. What is your opinion on the Cosi Loan
Posted on: 20th Jul, 2006 03:47 pm

Welcome to the forums.

The interest rate on a COSI loan is based on the COSI which is a stable index. So I think it will be a good move to consolidate your debts including the mortgage equity and credit cards with the COSI loan.

Know more about the COSI from this discussion.


Posted on: 20th Jul, 2006 08:16 pm
can anyone tell about the present value of cosi index..
Posted on: 31st Aug, 2007 06:18 pm
HI Bain,

At present the GDW COSI is at - 4.78 & Wachovia COSI at - 4.90
Posted on: 31st Aug, 2007 06:22 pm
You are confusing an option arm ( loan program offered by a lender ) and a COSI index which is the value indicator on which such a loan can be based on.
COSI is an Cost of Savings Index which can be used as a base for any loan. Other indexes include LIBOR, PRIME, Tbills ect.
COSI is closely tied to the rate that savings accounts payout to their clients at a particular bank. It is generally less violatile then stockmarket driven indexes.
To answer your question you will have 4 options for payment on your option arm ( hence the name )
1. Minimum payment this is the absolute minimum you can pay each month it is generally based on 1% or 2% interest rate and does not cover event your interest. Any interest not paid will be added to your principle balance. This increases your mortgage balance but increses your cashflow.

2. Interest Only payment - pays interest only ( your balance stay the same) generally 1.5-2 times higher then minimum payment

3. 30yr payment - Fully ammortised payment that pays your principle and inerest and is structured so that you payoff your mortgage in 30 years.

4. 15yr payment - same as above only to repay in 15 years.

As far as biweekly payments are concerned all they do is create a 13th payment in the year and in conventionally structured loans you reduce your principle balance and because of that you dont pay interest on the reduced portion and payoff your 30 year mortgage 5-7 years sooner.
With an option arm this would have a different effect depending on what payment option you choose.
Posted on: 01st Sep, 2007 04:10 pm
Great answer above by Eugene.
From what I've seen, most mortgages that are associated with COSI are an ARM, and many of those are still of the "Pick a Payment" or payment option varieties. In my world, those are not a good mortgage option for 90% of people out there.
There's nothing wonderful or advantageous generally about a COSI-based loan. Yes, it might be less volatile than some other ARMs, but that goes in both directions- up and down- for the most part. In my mind it's mostly a sales gimmick.
Good luck looking. Thanks,
Posted on: 30th Oct, 2007 03:37 pm
Hi Eugene,

Could you explain the concept of bi-weekly payment?

How do you make 13 payments in a year and not 26?
Posted on: 01st Nov, 2007 04:49 am
You are making 26 payments equal to 1/2 of the normal payent so in essence you end up making 13 full payments rather then 12 you would normally make on a typical mortgage. That last extra payment would go towards your principle balance on a conventional loan or would help offset your negative ammortisation in an option arm situation.
Posted on: 12th Nov, 2007 07:35 am
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