Cost of Savings Index, COSI Mortgage, COSI REFINANCE = Is the COSI right for me?

COFI, MTA, CODI, COSI and LIBOR OPTION ARMS
How would you like a mortgage with a minimum start rate as low as 1.25%? How about if you also had the option of paying interest only? What if it was hard to verify your income and you could still qualify for this loan? How would you like a loan that would adjust to your monthly income? How would you like a loan that left you enough extra money to pay off high interest credit cards or enabled you to put away money for retirement or your child's college education? If this loan sounds too good to be true, IT ISN'T...IT'S JUST THE BEST KEPT SECRET AROUND. Why haven't you heard about this loan before?? That's because most realtors and loan officers don't know about it or understand how it works and therefore don't recommend it. However, not only do we understand this great, but somewhat complicated loan, but we can actually give you examples of what your monthly payment might look like.

So go ahead and read about this great loan program and then give us a call and we'll find the loan that's best for you!!! If it's not this loan, we have hundreds of programs to choose from.

What is a 1 OR 3 Month Adjustable Rate Mortgage?
What are the benefits of a 1-Month Option Adjustable Rate Mortgage?
Further Explanation of Payments
What does COFI, MTA, CODI and COSI stand for?
Cofi Loan - What does it stand for? Cofi Parameters and 2 Yr Historical Index
MTA Loan - What does it stand for? MTA Parameters and 2 Yr Historical Index
COSI Loan - What does it stand for? Cosi Parameters and 2 Yr Historical Index
CODI Loan - What does it stand for? Codi Parameters and 2 Yr Historical Index
Libor Loan - What does it stand for? Libor Parameters and 2 Yr Historical Index
Interest Only Loans

WHAT IS DEFERRED INTEREST?
Index Highs and Lows over the last 10 years - plus present start rates (minimum payment rate)
Payment Cap
Other Benefits
Interest Only Calculator - See the savings benefits for yourself.

WHAT IS A 1 OR 3 MONTH ADJUSTABLE RATE MORTGAGE?
A 1 or 3 month adjustable rate mortgage is based on an ever-below market index - either the COFI, MTA, CODI or COSI - and has the following loan features:

A fixed interest rate for an initial 1 month or 3 month period; thereafter the interest rate may change monthly.
A minimum payment amount, based on the start rate, that adjusts on an annual basis subject to a 7.5% payment change cap
A 7.5% payment change cap limits how much the minimum monthly payment can increase or decrease from the previous minimum payment, except on the fifth year of your loan and every five years thereafter. (Payment change caps are not effective when the principal balance exceeds 125% (this percentage cap varies depending on program) of the original loan amount and payments may adjust more frequently than annually in such situations to enable your loan to be repaid in 30 years. Payment adjustments are calculated based on the remaining loan term and current interest rate.)
A lifetime interest rate cap that protects you by limiting how high your interest rate can go.
Interest rate is calculated by adding together the loan margin (this is fixed throughout the life of the loan) and the current month's index rate.

WHAT ARE THE BENEFITS OF AN ADJUSTABLE RATE MORTGAGE?
Each month, you receive a loan statement lets you choose the payment amount that best suits your financial situation: pay the Minimum amount to free up funds for other uses, or make larger payments for faster equity build-up. It's ideal if your income fluctuates or steadily increases over the years.
Up to Four Payments Options each month
Option 1 - Minimum Payment Due - This option gives you more cash now and keeps your monthly payments manageable. The minimum payment allows for the lowest mortgage payment of any kind of loan.
You can pay the minimum amount, in which case some of your interest would be deferred. Deferred interest,occurs when the monthly payment is not sufficient to cover the Interest and sometimes Principal accrued during the month prior. The unpaid Interest (and Principal) is added to the balance of the loan, rather than increasing the current monthly payment.
Payment changes annually and is calculated using the initial interest rate for the first 12 months.
The minimum monthly payment is usually recalculated annually thereafter; and is based on the outstanding balance, remaining loan term and prevailing interest rate
7.5% Payment Change Cap limits how much this option payment can increase or decrease each year
During the initial interest rate period (1 month or 3 months), Option 1 represents a full principal and interest payment; therefore Options 2 and 3 are not applicable.
Option 2 - Interest Only Payment - At those times when the minimum monthly payment is not sufficient to pay the monthly interest due, you can avoid deferred interest by paying the minimum monthly payment plus any additional interest accrued during the month.
Payments remain manageable, with no change in your principal balance for that month
Option 2 will not be offered if the interest only payment is less than the minimum payment due.
Option 3 - 30 Year Full Principal and Interest Payment - This is the fully amortized payment based on a 30 year loan. (Some programs offer a 40 year term)
Calculated each month based on the prior month's interest rate, loan balance and remaining loan term
Pays all the interest due and reduces your principal, to pay off your loan on schedule
Option 3 will not be offered if the full principal and interest payment is less than the minimum payment due.
Option 4 - 15-Year Full Principal and Interest Payment (if applicable - depends on lender)- For faster equity build-up, quicker payoff and substantial interest savings, choose the largest monthly payment option.
Calculated to amortize your loan based on a 15-year term from the first payment due date
Option 4 will be offered only on the 30- or 40-year term and will cease to be an option when the loan has been paid down to its 16th year.
Lifetime interest rate cap (life cap) which protects you financially by limiting how high your interest rate can go.
Fixed margin for the life of the loan.
Manage Cash Flow
Having up to four payment options allows you to manage your cash flow and overall financial picture on a monthly basis.
If rates increase, you can pay the minimum amount (Option 1), in which case some of your interest would be deferred. Deferred interest, also known as negative amortization, occurs when the monthly payment is not sufficient to cover the interest accrued during the prior month. The unpaid interest is added to the balance of the loan, rather than increasing the current monthly payment.
You can avoid deferred interest and take advantage of the maximum tax benefit in the current year by paying Option 2 or 3.
Rate decreases may result in accelerated amortization, reducing principal or any unpaid interest more rapidly.
Tax Planning. The borrower can defer interest payments and at the end of the year, analyze their tax situation. If it serves their tax interests, they can make a lump sum payment toward any interest that has been deferred and deduct it for tax purposes.
Easy qualifying. Many COFI/MTA/CODI lenders allow homebuyers with good credit to apply without documenting their income, assets, or source of down payment.
Increase Flexibility - After considering your monthly financial objectives, choose the available option that best suits your needs. Just enter the amount of the option selection in the payment coupon section of the loan statement. In addition to the four payment options, your monthly statement will show, if applicable, the total amount of unpaid deferred interest on your loan. You may pay all or part of this deferred interest at any time. No options will be offered if the loan is delinquent; then the total amount due will be required.

FURTHER EXPLANATION OF PAYMENT OPTIONS

MINIMUM MONTHLY PAYMENT: Pay the Minimum amount due, which will result in some Principal & Interest (P.I.) being deferred in the early years of your mortgage. The initial "Start Rate" is not a Principal and Interest Rate. The purpose of the low Starting Rate, is to "establish" what the Minimum payments will be for the first year. You will be allowed to continue making the Minimum payment for 12 months, but you may not be paying all the Principal & Interest (P.I.) due every month, and you could therefore be acquiring deferred interest (negative amortization). Starting with the 1st day of your new COFI, COSI, MTA or CODI mortgage, your loan balance is going to be re-amortized every month, based upon the "Fully Indexed" rate (Index + Margin). Therefore on day one (1), the interest rate adjusts to what is known as the "Fully Indexed" Rate or the Index + Margin. If you continue just making Minimum Payments for the next 12 months, beginning in year 2, the computer will increase your 1st year Minimum payment by the 7.5% payment cap. If you still continue to make only the Minimum payment, the computer will continue to increase your Minimum payment every year (on your anniversary date) by the 7.5% payment cap until you pay off all of your deferred P.I. Once all of your deferred P.I. is paid off, the Minimum payment option will disappear, as you will now be making the "Scheduled" payment (or the payment that will be based upon your then outstanding loan balance x the fully indexed payment, to still pay your mortgage off in full for the remaining years left on your mortgage). The Minimum payment option, like all the other monthly payment options, will still pay your mortgage off in 30 years or less. The Minimum payments are guaranteed for the 1st five years of your mortgage (unless you hit the maximum amount you are allowed to defer -- which varies from lender to lender -- at which time your loan would be recast to enable you to pay down the principal and you may therefore lose this option).

INTEREST ONLY PAYMENT - Beginning in year 2, the computer will increase your 1st year Interest only payment by the 7.5% payment cap. If you still continue to make only the Interest only, the computer will continue to increase your Interest only payment every year (on your anniversary date) by the 7.5% payment cap until you pay off all of your deferred Principal.

Pay full Principal & Interest ("Scheduled" payment) amount to fully amortize your loan according to the original term. The fully Indexed Rate, is the monthly Principal and Interest (P.I.) due. It is achieved by adding the margin to the current COFI/COSI/MTA/CODI index. The Margin never changes for the life of your mortgage. The Index changes every month after the initial Start Rate period. If you always pay the fully indexed rate, you will never have deferred interest (negative amortization), and the 7.5% yearly payment increases will not necessarily come into play.

15 year payment will also be reflected on your monthly statement. If you choose this option every month, you will pay off your loan in 15 years.

Pay any amount extra over the Minimum amount due. - i.e., even if you elect to have a pre-payment penalty (you may opt out of a prepayment penalty by paying points -- this varies from program to program and may also be dependent on loan size), you are still allowed to pre-pay (lump-in) up to 20% of the original loan balance, plus your normal P&I for the first three years of your loan without incurring a penalty. After this pre-payment period (the length of prepayment may vary from program to program), you can pay the loan off in full if you like. If you don't have a pre-payment penalty, you can lump-in any extra amount, at any time, and pay your loan off in full after either one month, one year, etc.

What does COFI, MTA, CODI and COSI stand for?

COFI - Cost of Funds Index (Click here for details on the COFI)
MTA - Monthly Treasury Aveage (Click here for details on the MTA)
CODI - Certificate of Deposit Index (Click here for details on the CODI)
COSI - Cost of Savings Index (Click here for details on the COSI)
LIBOR -London Interbank Offered Rate (Click here fore details on the Libor)

WHAT IS DEFERRED INTEREST?

"What is Deferred Interest, Anyway?"
With the COFI/COSI/CODI/MTA adjustable rate mortgage, CHOOSING THE OPTION OF "MINIMUM PAYMENT" sometimes doesn't cover all of the Principal and Interest due that month. When that happens, you "defer" the extra Principal and Interest, by adding it to the outstanding balance of your mortgage. Deferred interest may occur if:
You have a mortgage with a special "MINIMUM PAYMENT" option.
The 7.5% ANNUAL PAYMENT CAP on your mortgage goes into effect.
THE INDEX THAT DETERMINES THE INTEREST RATE on your loan goes up. However, the factors that cause deferred interest are also the factors that make a loan affordable:
A MINIMUM PAYMENT allows payments to remain low during the critical first five (5) years of home ownership.
PAYMENT CAPS limit how much the monthly payment can rise each year. (Payments can also drop when the Index-falls.)
"How Will I Ever Pay Off My Loan If Deferred Interest Is Making My Balance Go Up?"
Your COFI/COSI/CODI/MTA mortgage is designed to pay off on time; it is guaranteed. While there are occasions when deferred interest can add to your loan balance, there are may other periods when your loan pays off at a faster than normal rate. Over time, these periods of deferred interest and faster payoff offset each other. The result: your mortgage pays off on schedule.
"Must I Have Deferred Interest On My Loan?"
No. Your loan has a Deferred Interest Payment Option that offers you a variety of choices on how to pay off your loan. These payment choices are clearly listed on the payment coupon of your monthly loan statement. You can, if you choose, pay all interest as it accrues, thereby avoiding having deferred interest added to your loan balance. You'll also always have an option to make a payment based upon the fully indexed rate or Index + Margin, thus avoiding negative amortization all together.
"Is It To My Advantage To Pay Deferred Interest As It Occurs?"
It all depends on your financial situation. For some homeowners, it's wise to pay all the Principal and Interest as it occurs. For many others, it makes more financial sense to pay just the Interest that is due, and others will opt to defer both their Principal and Interest, as they are looking for the lowest pmts. possible.
THE ADVANTAGES OF HAVING a "DEFERRED INTEREST/Negative Amortization" OPTION : Electing not to pay all the Principal and Interest will mean more cash in your pocket. Choosing this option (Minimum payment) makes financial sense if it helps you:
Keep house payments affordable in case of the loss of a job.
Save money by paying debts with higher interest rates than your mortgage. Do you have an outstanding credit card debt? Or a high-rate home equity? If so, you'll benefit by not paying deferred interest on your mortgage. Use the money to help pay your other debts instead. You'll save the difference between the rate charged on other loans (18% or more for VISA, MasterCard, or store credit cards) and the much lower rate on your COFI/COSI/CODI/MTA mortgage, which is tax-deductible.
Make home improvements that increase the value of your property. Rather than paying deferred interest, use the cash you save to help you for:
New carpeting.
Adding a bathroom.
Landscaping your property.
Installing a sun deck.
Invest in other profitable alternatives. Use the money that remains in your pocket when you choose not to pay deferred interest to:
Fund an IRA or invest in a mutual fund.
Build up a college fund for your children.
The Index changes every month, but the Margin never changes. Your COFI, MTA, COSI, or CODI loan balance will change monthly regardless of what payment option you choose:

If you make the "Fully Indexed" payment/"P.I." payment (Index + Margin) or "Scheduled payment" (Index + Margin X outstanding loan balance) option every month, your loan balance will always decline regardless of the movement of the Index. This is because your loan balance will be lower each month, and this lower balance will then be re-calculated by the new monthly Index + Margin. Hence, the yearly 7.5% Payment Cap will never be enforced or "come into play", because your outstanding loan balance will always be declining even if the Index is increasing, as the computer will readjust your next P.I. (Scheduled payment) higher to compensate for the higher Index.
If you make only the "Minimum payment" option, your loan balance will increase (negative amortization) for the first few years. This option is completely allowed by the Lender without hurting your credit rating, or charging any type of late fees. Hence, If your monthly Minimum payment is not sufficient to pay the full amount of interest due, the Lender adds this accrued but unpaid interest to the unpaid principal balance of the loan. Until repaid, deferred interest bears interest at the fully indexed rate of the loan. Eventually (because of the "forced" yearly 7.5% payment Cap adjustments), the Minimum payment is more than sufficient to pay the full amount of interest due, (this usually takes between 6-8 years depending upon your initial "Starting Rate", Margin, and the movement of the Index), and the Lender will subtract the amount that exceeds the interest due (negative amortization) from the principal balance, resulting in a principal reduction. Eventually, because of the 7.5% yearly payment cap, your Minimum payments will become a full P.I. payment or Scheduled payments.
Your existing principal balance may never exceed 125% (this amount may change from lender to lender) of the original principal balance amount in any 5 year period. If deferred interest (negative amortization) ever caused your principal balance to reach these limits, the Lender would immediately increase your Minimum payment without regard to the 7.5% payment cap. The increased Minimum payment would pay off the loan at the then current fully indexed rate (Index + Margin) and remaining term. In that event, in the 5th, 10th, 15th, 20th, and 25th years, the Lender would take the amount of deferred interest, add it to the existing balance, and "recast" or re-amortize the loan so that it will still pay off on its original term. This has never happened since the creation of the COFI program in 1981, because the Index moves so slowly!!


7.5% Payment Cap

COFI, CODI and MTA Lenders do not implement the traditional yearly interest rate caps ( 2% yearly cap / 6% life cap). Instead, our Lenders use a payment cap. The "Payment Cap" is designed to keep the yearly increase in your monthly payment low in the event that the interest rate is rising so rapidly that the Borrower could default on the loan. With a payment cap, the next year's monthly payments could never rise above 7.5% of the prior year?s monthly payments. For example, a $100,000 loan balance with monthly payments of $700.00, a 2% "Interest Rate" increase in the existing interest rate would correlate into a new monthly payment of $833.10. A difference of $133.10 per month. The same $100,000 loan balance with monthly payments of $700.00 with a "Payment Cap", the next year's monthly payments could only increase by $52.50 for a total monthly payment $752.50. If you always make the full P.I. payment (Scheduled payment), the Payment cap will most likely never come into force, even if the Index increases for a long period of time. This is because every month or every two weeks (Bi-weekly program), you will have a "decreasing" loan balance. Also, these Indexes move so SLOWLY. If you always make the Scheduled payment, when the COFI, CODI and MTA starts to drop, your payments will drop, but never more than 7.5% of the prior years Scheduled payment. But if you only make the Minimum payment or Interest-only payments, then the Payment Cap will come into play (on your yearly anniversary date) and increase your prior year "payment" no more than 7.5%. (The 7.5% payment cap has nothing to do with your fully Indexed Rate or Index + Margin.) Once your "Minimum payment" and or "catches up" to the normal full P.I. or Scheduled payment (to still pay your house off in 23 years via bi-weekly payments, or 30 years via monthly payments) your payments will not be forced up anymore via the Payment Cap. If at that time the COFI, CODI and MTA index started to drop, your payments will start to drop. The Minimum payments are guaranteed for the first five (5) years regardless of the movement of the Index.

OTHER BENEFITS OF THE COFI/CODI/COSI AND MTA LOANS
Depending on the loan program, the following additional benefits may apply:

Convertible to a Fixed rate between years 4 and 7
Loans structured so that there is no Mortgage Insurance (1st up to 80% and 2nd for required balance)
Qualifying not based solely on FICO scores, but on overall credit history, value of property, etc.
80% LTV (One Loan) - No Minimum FICO credit score requirement; salaried or self-employed borrowers; earned or passive income acceptable; salaried borrowers may obtain 100% gift funds for downpayment & closing costs; 10% gift funds allowed for self-employed borrowers (case by case); salaried borrowers do not need any established credit (case by case); no asset reserves required; owner occupied only.
FOREIGN NATIONALS - Up to 70% Loan - No Minimum Credit score, No Established credit necessary, No Social Security Number Required, No verification of assets required on owner occupied transactions, Second homes or investor property transactions acceptable.
No income, No asset, No employment verification - PERFECT FOR SELF-EMPLOYED LESS THAN 2 YEARS!!! (Owner-occupied only/First time buyers do not qualify for this program)
No income/No asset programs
89.9% LTV with NO MORTGAGE INSURANCE!!
START RATES AS LOW AS 1.25%
Bi-weekly payments (CODI & COSI) starting at 1.95%. The bi-weekly payment helps keep negative am at a minimum.
THERE ARE MANY OTHER BENEFITS!!! TOO MANY TO LIST!!! CALL FOR DETAILS!!!

Choose the mortgage payment
that fits your needs.

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World's Pick-a-Paymentsm Loan means more money for you?every month.
Enjoy the freedom to choose the initial amount of your monthly mortgage payments. With World's Pick-a-Payment Loan, you have the financial flexibility to select a low payment and increase your monthly cash flow. How low could your monthly payment be? The chart below gives you a good idea. For example, let's say you have a 30-year loan with 360 monthly payments, and an interest rate of 4.7% (4.9% APR). *
If your loan amount is: You can pick a payment as low as:
$100,000......................................................... $367.12

$200,000........... ............................................. $734.25

$300,000......................................................... $1101.37

$400,000......................................................... $1468.50

$500,000......................................................... $1835.62

Control your finances and increase your monthly cash flow. Use the extra cash to pay off high-interest credit card debt, make home improvements, or invest for your retirement. It's your money, it's your choice.

Cost of Savings Index