So what really is a COSI Loan or Pick-a-Payment Loan?

This safe and reliable mortgage is based on (in our opinion) the most stable lending index in America, the COSI or Cost of Savings Index.

As with all Adjustable Rate Mortgages, the index is the MOST important component of the loan since the index is what drives the success or failure of that particular mortgage. The COSI has remained consistently low and extremely stable due to the fact that it is not based on market factors in a fluctuating economy. The COSI represents the average of interest rates paid to Customers within Golden West Financial system on checking, savings, money markets and short term CD accounts.

The COSI is based on a weighted annualized rate of all interest rates in effect on deposit accounts as of the last day of each month. That rate is then used as the Index and published for usage in lending products the following month.

Cost of Savings Index

Historically, the COSI has fluxuated less rapidly than other indices such as the PRIME Rate, the LIBOR, U.S. Treasury Bills, etc…This stability is gained from the fact that the COSI is composed primarily of fixed-rate deposits of varying maturity dates. Since rates on these deposits are not affected by changes in market interest rates until the deposits mature, the average interest rate on deposits in a particular month generally comprises interest rates that were in effect in previous months. This would be similar to calculating a rolling average of interest earned over a 12 month period of time. The benefit to consumers is that when market interest rates for deposits rise or fall the COSI will lag behind the market and in most cases fail to move as rapidly or with the same volatility. The COSI and its nearest cousin the COFI (Cost of Funds Index) are the least volatile and slowest moving indices in the world, and therefore in our opinion offer some of the safest options for mortgage lending.

COSI Loan Flexible Payment Options a.k.a. Pick-a-Pay Mortgage

As a consumer that selects a Pick-a-Pay loan you will receive an easy to read mortgage statement every month. This Pick-a-Pay loan allows you to actually choose the payment amount that best suits your financial situation. You can pay a "Minimum Payment” amount which is similar to a credit card minimum payment in order to free up your cash for other uses. You can make an interest only payment, a 30 Year standard amortization payment or even a 15 year payment to pay off your home more rapidly. This loan also offers a true Biweekly Equity Builder feature that allows you to pay off a 30 year mortgage in about 23 years. In our opinion the Pick-a- Pay loan based on the COSI is a very attractive option that allows you to use a mortgage a financial panning tool rather than just a debt.

You should consider a COSI Loan if:

• You desire to have the flexibility of a minimized housing payment
• You want to pay off non preferred credit card or short term consumer debt
• You would like the ability to utilize a minimum housing payment and invest the cash flow difference elsewhere
• You understand the power of controlling your cash flow and improving your tax position by paying the right kind of interest
• You desire to maximize your buying power on your next home purchase
• Your income tends to fluctuate and having a Pick-a-Payment option could really balance out your financial life
• You are in a situation where your income is certain to rise in the coming years and using this loan now helps you accomplish home ownership TODAY rather than tomorrow
• You are a business owner who needs the security of a lower monthly mortgage payment to ensure smooth cash flow management in your business

Pick A Pay sm Mortgage

Pick-A-Pay sm is a protected service mark of Golden West Financial Corporation