A COFI loan or Cost Of Funds Index is one of the most commonly used ARM indexes.  ARMs based on this index can adjust every month and COFI loans also have no caps.  The index that a COFI loan is tied to is a slow-moving index and basically the most stable index of all.  COFI loans are tied to the rate that banks have to pay their depositors (i.e. checking accounts, savings accounts, cd's).

The COFI loan is perfect for those wanting to get the lowest possible payment while trying to pay the least in interest over the loan term.  The initial rate of interest on a COFI ARM varies from borrower to borrower depending on things such as credit rating, property type, equity, and property location.  Also, most COFI ARMs have less paperwork and conditions.