What Is a COFI Loan?

Video Transcript

"Hi, my name is Matt McKillen. I'm with Innovative Financial Group. The question posed to me is what is a COFI loan? First off, COFI is actually a nickname for an adjustable rate mortgage index called the Eleventh District Cost of Funds. That index was very, very popular in the last few years, and a lot of the portfolio banks were using that as a way to determine your interest rate. For example, World Savings was very popular with it, Washington Mutual. And the way that index is based, it's based on the Eleventh District Bank's indexes, and they take an average of that. So when you have a COFI loan, that generally loan rate is published monthly, which means that your loan rate can change, maybe just a little bit, up or down on a monthly basis. There are some lenders out there that will take a twelve month average of the COFI index to set your final rate. But, again, in today's environment, more people are actually going for the fixed rate mortgage products than these type of adjustable rate loans. Again my name is Matt McKillen. I'm with Innovative Financial Group."