What should I know about a COSI mortgage?


A COSI mortgage is an adjustable rate mortgage indexed to the Cost-Of-Savings Index (COSI). As of recently, the Cost of Savings Index is referred to as W-COSI, or Wachovia COSI.

Why are COSI mortgages popular?

The COSI index lags behind with a month, and is considered more stable than other ARM indexes such as LIBOR, COFI, MTA or CODI. However, even if the COSI index has traditionally lower values than COFI and is higher than CODI and MTA, the difference in the effective mortgage rate will be offset by the lender's margin.

When should I take a COSI adjustable rate mortgage?

Commonly, you are generally not going for a COSI mortgage because of the index itself. Rather, the COSI mortgage loans are a top choice when rates are climbing, but not a very good choice if rates are going down.

Some Quick Facts about COSI Mortgages

  • Most common lifetime cap of a COSI loan - 12%.
  • There is a minimum payment change cap of up to 7%.
  • There are no periodic adjustment caps.
  • The original GDW COSI no longer is used for origination of new Option ARMs. Rather, the W-COSI will be used. The GDW COSI is still being published.
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