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Mortgage Types: Additional types of mortgages
COFI loansA COFI loan is a type of ARM that is tied to the cost of funds index. Most COFI-based ARMs use the index calculated every month by the Federal Home Loan Bank of San Francisco. According to that Bank, the monthly COFI reflects the actual interest expenses recognized during a given month by all its savings institution members. The COFI tends to be less volatile than Treasury bills, making the interest rate on COFI loans less volatile than the rate on standard ARMs. Most COFI loans, however, do not have caps, so there is no upper bound on how high your monthly mortgage payment could increase should interest rates go up. In addition, many COFI loans allow "negative amortization," where you can choose to make a minimum payment that is less than the interest accrued for your loan du |