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Posted on: 18th Nov, 2006 04:20 pm
I was working with a company called First Rate Mortgage on Long Island, New York. It will be last time. They were great at selling the program, but not good with customer service related matters. It appears, now that i'm in this loan for 3 months that the deferred interest is growing and will continue to do so. I'm trying to pay it down every month but I'm now spending more per month than when i had my traditional 30 year fixed loan. Should i be worried? Please tell me what you need from me in order to best answer this question.
Hi ccadigan,

It seems strange that your mortgage has deferred interest even though it is a fixed rate loan. Have you ever converted it into an ARM? Just check out with all the documents that the company has provided you till today.

Getting worried in your situation is quite obvious. But that will not solve your problem. I think you need to go through the loan papers first and then confront the company if you feel that they have made you sign any documents that you were not totally aware of. From my experience, I feel that may be you have signed certain documents by which your fixed rate loan has been transferred into an ARM and that too, an ARM leading to negative amortization.

In case you don't have any knowledge of Negative amortization, you may check out with our article on this topic.

I personally feel that you should talk to the company and tell them that you are not aware of the payment plan they expect you to follow. Request them to give you a proper explanation of the detailed plan and then try to follow it.

Let us know what you came out with, so that if you can require further advice, we can provide you with that and also more suggestions from our community members.


Posted on: 19th Nov, 2006 07:13 pm
Hello Caron,
Thanks for the response. Let me clarify. I had a fixed rate initially and then refinanced to a World Savings Cosi Loan with is an ARM. So I was aware of the adjustability but I was told that the loan I was getting based on the COSI index was more stable. It has fluctuated only higher since July. The minimum I was set up on pays my mortgage twice per month or every 14 days, but I'm defering $300 per payment or $600 per month in interest which I've been paying to stay on top of it. I wanted to save month per month, but not defer it to pay it later.

Have you ever worked with a World Savings Cosi Loan? Are you familiar with it?

Posted on: 19th Nov, 2006 08:30 pm
Hi Chris,

It's true that the COSI is more stable than any other index in the market. This implies that the COSI indexed rate fluctuates within a small range every month. So, your payments are likely to vary each month. Also, COSI loans have various payment schemes such as the minimum payment, fully amortized payment, 15 year payment, bi-monthly payment and the interest-only payment options.

I think you are making the minimum payment in the form of two installments at an interval of 14 days. And, since the minimum payment is lower than the interest actually due each month on the loan, so you are getting deferred interest each month.

I think you should talk to the lender asap and try to resolve this issue. He will be the right person to clarify all your questions as he has set up the repayment plan. But if you have any other query to discuss with us, please feel free to come up with it.

If you are interested to know more on COSI loan, check out with our previous discussion.

God bless you.

Posted on: 19th Nov, 2006 10:58 pm
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