What Is a COFI Loan?

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A COFI loan, referring to the 11th District Cost of Funds index, is a loan that has a rate that can fluctuate every month. Discover how some lenders will offer a COFI index average as a rate with help from a financial specialist in this free video on loans and money management.

Part of the Video Series: Loan Information
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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.

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