What are the cost of the fund index?

The cost of funds (Cofi) is one of the indexes used by creditors and banks to calculate interest rates when the rate changes over time. If the bank uses this index for bank accounts, the bank usually calculates the interest holder of accounts on accounts such as savings accounts. When the mortgage creditor uses the Cofi index, the creditor uses the index as the basis for the interest rate the debtor pays for the mortgage with an adjustable rate every time the rate is adjusted.

The coffee index is derived from the interest expenditure that banks, financial institutions and mortgage lenders of the report. There are specific banks and creditors reporting interest that each institution pays, including banks in the states of Nevada, Arizona and California. In addition, economical institutions that are members of federal banks for loan home in San FrancisCuber of various factors. Some of the factors that are included in the calculation of the cost of funds include market interest rates, resources that members of reporting to raise money,merger and acquisitions and accounting rules for institutions. This index usually remains consistent with other indices such as Prime, Libor or the US Treasury.

Since the cost of funds costs is the basis or basis of the interest rate determined by these different institutions, the margin is added to the index to determine the rate. For example, if the Cofi is 2.75 percent and the margin is 2.5 percent, then the interest rate that the bank pays on a savings account or loan fees is 5.25 percent. If the account is set, if the interest is paid or earned, an important factor is the way the interest rate is calculated.

The index is particularly important when ESTABLOCHOPS with a variable rate. Most account holders can determine their rate using the cost of funds and adding the range to which the creditor is tight.