What is a Cost of Savings Index?

COSI
For Purchase or Refinance

- 1.95% Purchase, Refinance of Private Home, for 1 to 4 Years.
- 1.95% is with Negative Amortization is for High Appreciated Home Values
- NO Application Fee
- Lowest Closing Cost in the Industry
- With a 7.5% Payment Cap and 11.95% Lifetime Cap
- Significant cash flow savings for the first five years
- Flexibility with your money.

Control of your finances when you start making payments.

Four payment options each month:

Minimum Payment,
Interest Only,
Fully Indexed Payment, or
Equity Building.

Cost of Savings Index (COSI) Mortgage Highlights

Full Documentation or No Documentation Option
No Asset Verification
Cash Flow, you can do what you want with the extra money.
No PMI - Private Mortgage Insurance;
NOTE: PMI is Expensive on Fixed Rate Loans greater than 80% LTV
Assumable, great advantage for selling your house faster
Bi-Weekly Program Option, reducing a 30 year term down to 26 years
Convertible to a Fixed rate between years 4 and 7.
Manage your money the way you want!
Bankruptcy 2 years discharge with Full Documentation
Pick Your Payment from 4 options.

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• Lowest closing cost
• Lowest total cost
• Lowest monthly payment
• Lowest down payment
• Fastest closing
• Lowest likelihood of refinancing

Following is the definition of the COSI index. The definition will appear in the COSI loan program disclosures:

The index for this loan is the weighted average of the rates of interest on the deposit accounts (sometimes called cost of savings) of the federally insured depository institution subsidiaries of Golden West Financial Corporation (“COSI” or “index”). Golden West Financial Corporation is a holding company listed on the New York Stock Exchange under the trading symbol “GDW.” All of the depository institution subsidiaries of GDW currently operate under the name World Savings.

The COSI consists of the weighted annualized rate of interest in effect on deposit accounts, adjusted for the effects of financial instruments related to deposit accounts and other adjustments determined by GDW in its sole discretion as appropriate to accurately reflect the weighted average of interest rates on the deposit accounts. It does not include accounts owned by GDW or its subsidiaries.

GDW computes the COSI as of the last day of each calendar month and announces it on or near the last business day prior to the fifteenth day of the following calendar month. For example, GDW announces the February COSI on or near the last business day prior to the fifteenth of March. It is in effect until the announcement of the March COSI in April.

COSI/Loan Programs
The loan programs listed are all COSI Adjustable Rate Mortgages. MARM stands for Modified Adjustable Rate Mortgage. The number following MARM is the monthly modified period. After the modified period expires all loan programs are monthly adjustable.

COSI MARM-1 (Low Start Rate)
Bi-Weekly is mandatory on this program.

Payment
Changes annually. Each year on the anniversary date the payment can change no more than 7.5% of the previous payment amount. This is a cash flow loan and an interest only payment is available.

Interest Rate
Adjusts monthly after the first month, however, the payment will not change other than at the Borrower’s option.

Index
COSI Index

Margin
Fixed for the full term of the loan.

COSI MARM-3 (Low Start Rate)
Bi-Weekly is available on this program.

Payment
Changes annually. Each year on the anniversary date the payment can change no more than 7.5% of the previous payment amount.
Example: If the payment was $500.00 the maximum increase would be to $537.50.

Interest Rate
Fixed at the modified start rate for the first three months then adjusts monthly. Payment will only change annually other than at the Borrower’s option.

Index
COSI Index

Margin
Fixed for the full term of the loan.

COSI MARM-12
1 Year Adjustable Rate Mortgage (Type Code 150)
Bi-Weekly is available on this program.

Payment
Changes annually. Each year on the anniversary date the payment can change down, or up, no more than 7.5% of the previous payment amount. Example: If the payment was $1,000.00 the maximum payment could increase the second year would be to $1,075.00.

Interest Rate
Fixed at the modified start rate for the first twelve months then adjusts monthly. Payment will only change annually other than normal at the Borrower’s option. Refer to World’s loan statement for payment options.

Index
COSI Index. Call Mark Margin-Fixed for the full term of the loan.

Rate Lock
Adjustable rate mortgages are locked for 60 days from the date of submission of your file.

A COSI ARM can cost you much less than a fixed rate home loan.

The following are some common ARM terms and what they mean:
Index – The index of an ARM is the financial instrument that the loan is "tied" to, or adjusted to. The most common indexes are the 1-year Treasury Security, LIBOR (London Inter-bank Offered Rate), Prime 6-month Certificate of Deposit (CD), 12-MAT (Moving Treasuries Average) and the 11th District Cost of Funds (COFI). Each of these indexes move up and down based on financial market conditions.

Margin – The margin is one of the most important aspects of ARMs because it is added to the index to determine the interest rate that you pay. The margin added to the index is known as the fully indexed rate (5.50% index plus 2.50% margin equals 8.00% fully indexed rate). Margins range from about 1.75% to 3.50% depending on the index, loan to value and borrower credit rating.

Interim Caps – All ARMs carry interim caps. Interest rate caps of six-months to a year are most common but some have caps up to three years. Rate caps are a good thing when interest rates are rising and a bad thing when rates are falling.

Payment Caps – Some loans have payment caps instead of interest rate caps. These loans reduce "payment shock" in rising rate markets, but can also lead to deferred interest or "negative amortization." The most common of these mortgage types caps your payments at 7.5% of the previous payment.

Lifetime Caps – Most ARMs carry a lifetime cap or maximum interest rate. The lifetime cap, which varies by loan program, have higher margins with lower lifetime caps and, visa versa, mortgages that carry low margins often have higher life time caps.

ARMs are available for both purchases and refinances. As a rule, ARMs with indexes that are subject to rapid change lets you take advantage of quickly falling interest rates. An index that lags the market (such as the COFI mortgages) protects you when rates quickly rise. Changes in the index are what change your monthly payments.

These links are from third party information. This information is NOT endorsed by Mrates.com but it is to serve as additional resources.

Additional Cost of Savings Index (COSI) information click here

Is the COSI right for me?