11th District Cost of Funds Index (COFI)

Understanding the 11th District Cost of Funds Index (COFI)

The 11th District Cost of Funds Index (COFI) is a benchmark interest rate used by mortgage lenders in the western United States to determine the cost of borrowing funds. It's based on the average interest rate paid by savings institutions in the 11th Federal Home Loan Bank District on their deposits and borrowings, and it's used to adjust the interest rate on adjustable-rate mortgages (ARMs) in Arizona, California, and Nevada.

What you need to know about COFI

If you're considering an ARM in the 11th District, it's important to understand how the COFI works and how it may affect the interest rate on your mortgage. Here's what you need to know.

How the COFI is Calculated

The 11th District COFI is calculated by the Federal Home Loan Bank of San Francisco and is based on the average interest rate paid by savings institutions in the 11th District on their deposits and borrowings. It's published on the first business day of each month and reflects the average interest rate paid during the previous month.

How does the COFI Affects ARM Interest Rates?

The COFI is used by mortgage lenders in the 11th District to set the interest rate on ARMs. It's just one of several factors that can affect the interest rate on an ARM, and other factors, such as the lender's margin, may also be taken into account. The COFI is typically used to adjust the interest rate on ARMs on a monthly or annual basis, and it's expressed as a percentage.

Alternatives: Other Indices That May Be Used

The 11th District COFI is just one of several indices that can be used to determine the interest rate on an ARM. Other commonly used indices include the London Interbank Offered Rate (LIBOR) and the Constant Maturity Treasury (CMT). It's important to understand which index your ARM is tied to and how it may affect the interest rate on your mortgage.

Considerations for Borrowers:

If you're considering an ARM in the 11th District, it's important to understand how the COFI works and how it may affect the interest rate on your mortgage. You should also be aware of any other factors that may affect the interest rate, such as the lender's margin, and be prepared for the possibility that the interest rate on your ARM may change over time.

Make more informed decisions by knowing about COFI

By understanding the 11th District Cost of Funds Index (COFI) and how it may affect the interest rate on your adjustable-rate mortgage (ARM), you can make informed decisions about your mortgage and budget accordingly. It's important to carefully consider all of your options and to work with a lender you trust to find the mortgage that's right for you.