COFI LOAN Meaning and
Definition
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A COFI loan, also known as a Cost of Funds Index loan, is a type of adjustable-rate mortgage where the interest rate is determined based on the financial institution's cost of funds. This index is typically calculated by considering the interest rate paid by banks and other lenders on deposits and other sources of funds. The COFI loan is one of the several types of adjustable-rate mortgages that use an index to determine the interest rate adjustments for the borrower.
In a COFI loan, the interest rate is initially set for a specific period, known as the initial fixed-rate period, which is usually 3, 5, 7, or 10 years. After this period, the interest rate may adjust periodically, often annually, based on changes in the COFI index or other specified criteria. This means that the monthly mortgage payment can vary throughout the loan term depending on the index's fluctuations.
COFI loans provide borrowers with the potential for lower interest rates during the fixed-rate period compared to fixed-rate mortgages. However, they also come with the risk of increasing interest rates in the future, leading to higher monthly payments. The adjustments are commonly capped to prevent significant variations in mortgage payments. Borrowers considering a COFI loan should carefully assess their financial situation and future prospects to determine if this type of mortgage aligns with their goals and risk tolerance.
Common Misspellings for COFI LOAN
- xofi loan
- vofi loan
- fofi loan
- dofi loan
- cifi loan
- ckfi loan
- clfi loan
- cpfi loan
- c0fi loan
- c9fi loan
- codi loan
- coci loan
- covi loan
- cogi loan
- coti loan
- cori loan
- cofu loan
- cofj loan
- cofk loan
- cofo loan
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