Need help: 10yr fixed (3%) vs monthly COFI based loan

[Pratik Jhaveri]

Hi, 

We are in contract on a 3-plex in San Francisco. Will occupy one unit and rent out the other two.

We are trying to lock a mortgage and wanted to see if anyone had advice on pros and cons of a fixed vs COFI based loan

Option 1 - 10yr fixed, adjusts monthly after - 3% rate initial, margin of 2.25% cap at 9.95%

Option 2 - monthly adjusting COFI based mortgage, base rate of 1.5%, margin of 0.8%, cap at 9.95%

We are leaning towards #2 as it saves us nearly $1500-2000 in mortgage. I believe the world is far from getting out of this mess and low interest rates will persist for another 3-5yrs. 

Would appreciate your thoughts, feedback and experience

Pratik