CitiMortgage: Choose the Right Mortgage: ARM" <META content="text/html; charset=windows-1252" http-equiv=Content-Type> <META hstrack{ChooseMortgage,MortTypesARM,every,ToolsAdvice,CitiMortgage}> <script language=JavaScript type="text/javascript"> </SCRIPT> <script language=JavaScript type="text/javascript">  </SCRIPT> <SCRIPT language=vbscript> function detect() detectWindow=null on error resume next detectWindow = MPpopup.document.title if err.number <> 0 then detectWindow=err.description else detectWindow = "Open!" end if on error goto 0 detect=detectWindow end function </SCRIPT> <script language=JavaScript type="text/javascript">  </SCRIPT> <script language=JavaScript type="text/javascript">  </SCRIPT> <LINK href="file:///E|/1_PROJECTS-HARI/new_yourloan/www.citimortgage.com/glossary/CitiMortgage%20assistant_files/cm_arm_files/style.css" rel=StyleSheet type="text/css" name="cssDefault"> <META content="MSHTML 5.00.2920.0" name=GENERATOR></HEAD> <body bgcolor=white leftMargin=0 link=#4140c5 topMargin=0 marginheight="0" marginwidth="0"> <TABLE border=0 cellPadding=0 cellSpacing=0 width=527> <TBODY> <TD colSpan=9><img src="cm_arm_files/pt_rateshop.gif" width="388" height="25"></TD> <TD colSpan=3> <script language=JavaScript type="text/javascript"> function ShowLoginButton() { if(window.parent.parent.opener==null) { if(document.cookie.length>0 && document.cookie.search("SESSIONID")!=-1) { if(location.protocol=="https:") { document.write("<a href='https://secure.citimortgage.com/secure/pw.dll/Logoff' onMouseOver=\"document.logoff.src='https://secure.citimortgage.com/0/bu_logoff_on.gif'\" onMouseOut=\"document.logoff.src='https://secure.citimortgage.com/0/bu_logoff_off.gif'\" onfocus=\"this.blur();\"><img name='logoff' src='https://secure.citimortgage.com/0/bu_logoff_off.gif' width=74 height=13 alt='Logoff' border=0></a><img src='https://secure.citimortgage.com/0/0.gif' width=10 height=1 alt='' border='0'>"); }else{ document.write("<a href='https://secure.citimortgage.com/secure/pw.dll/Logoff' onMouseOver=\"document.logoff.src='http://secure.citimortgage.com/0/bu_logoff_on.gif'\" onMouseOut=\"document.logoff.src='http://secure.citimortgage.com/0/bu_logoff_off.gif'\" onfocus=\"this.blur();\"><img name='logoff' src='http://secure.citimortgage.com/0/bu_logoff_off.gif' width=74 height=13 alt='Logoff' border=0></a><img src='http://secure.citimortgage.com/0/0.gif' width=10 height=1 alt='' border='0'>"); } } } } ShowLoginButton(); </SCRIPT> </TD> </TR> <TR> <TD align=right colSpan=9 vAlign=top> </TD> <TD colSpan=3></TD> </TR> <TR> <TD></TD> <TD colSpan=7><FONT class=pg-t color=#e41f1f face="Trebuchet MS,Arial,Helvetica" size=+1><B>Annual Percentage Rate</B></FONT><BR> <IMG height=6 src="rs_apr_files/0.gif" width=1></TD> <TD colSpan=4></TD> </TR> <TR> <TD></TD> <TD colSpan=7><FONT class=text face=Arial,Helvetica size=-1>An annual percentage rate (APR) shows the total annual cost of a mortgage (closing costs and interest) over its full term (usually 30 years), shown as a percentage of the amount borrowed.</FONT></TD> <TD colSpan=4></TD> </TR> <TR> <TD colSpan=12><IMG height=20 src="rs_apr_files/0.gif" width=1></TD> </TR> <TR> <TD></TD> <TD colSpan=7><FONT class=2nd-lvl face="Trebuchet MS,Arial,Helvetica" size=-1><B>Why use APR?</B></FONT></TD> <TD colSpan=4></TD> </TR> <TR> <TD></TD> <TD colSpan=7><FONT class=text face=Arial,Helvetica size=-1>APR is a good way to compare mortgage products. APR combines the interest rate and any lender or broker fees.</FONT> </TD> <TD colSpan=2></TD> <TD rowSpan=3 vAlign=top><FONT class=pq color=#1c184d face=Verdana,arial,helvetica size=-2><B>By looking only at either closing costs or interest rate you don't see the whole picture.</B></FONT></TD> <TD></TD> </TR> <TR> <TD colSpan=12><IMG height=20 src="rs_apr_files/0.gif" width=1></TD> </TR> <TR> <TD></TD> <TD colSpan=7><FONT class=2nd-lvl face="Trebuchet MS,Arial,Helvetica" size=-1><B>APR is universal</B></FONT><BR> <FONT class=text face=arial,helvetica size=-1>We are required by law to provide you with an APR when quoting the rate of a loan, so you can compare total costs between loan products.</FONT></TD> <TD colSpan=4></TD> </TR> <TR> <TD colSpan=12><IMG height=20 src="rs_apr_files/0.gif" width=1></TD> </TR> <TR> <TD colSpan=12><IMG height=20 src="rs_apr_files/0.gif" width=1></TD> </TR> <TR> <TD></TD> <TD colSpan=7><FONT class=2nd-lvl face="Trebuchet MS,Arial,Helvetica" size=-1><B>Example: $100,000 fixed rate mortgage</B></FONT></TD> <TD colSpan=4></TD> </TR> <TR> <TD></TD> <TD colSpan=7> <TABLE border=0 cellPadding=0 cellSpacing=0 width=346> <TBODY> <TR> <TD><IMG height=1 src="rs_apr_files/0.gif" width=1></TD> <TD><IMG height=1 src="rs_apr_files/0.gif" width=4></TD>  <TD><IMG height=1 src="rs_apr_files/0.gif" width=85></TD> <TD><IMG height=1 src="rs_apr_files/0.gif" width=83></TD> <TD><IMG height=1 src="rs_apr_files/0.gif" width=83></TD> <TD><IMG height=1 src="rs_apr_files/0.gif" width=85></TD>  <TD><IMG height=1 src="rs_apr_files/0.gif" width=4></TD> <TD><IMG height=1 src="rs_apr_files/0.gif" width=1></TD> </TR> <TR> <TD colSpan=2 rowSpan=2><IMG height=5 src="rs_apr_files/t-nw.gif" width=5></TD> <TD bgcolor="#000000" colSpan=4><IMG height=1 src="rs_apr_files/0.gif" width=1></TD> <TD colSpan=2 rowSpan=2><IMG height=5 src="rs_apr_files/t-ne.gif" width=5></TD> </TR> <TR> <TD bgColor=#7394ad colSpan=4><IMG height=4 src="rs_apr_files/0.gif" width=1></TD> </TR> <TR> <TD bgcolor="#000000"><IMG height=1 src="rs_apr_files/0.gif" width=1></TD> <TD bgColor=#7394ad><IMG height=1 src="rs_apr_files/0.gif" width=4></TD> <TD bgColor=#7394ad><FONT class=table-txt-a Color="#ffffff" face="Trebuchet MS,Arial,Helvetica" size=-1><B> </B></FONT></TD> <TD align="center" bgColor=#7394ad><FONT class=table-txt-a Color="#ffffff" face="Trebuchet MS,Arial,Helvetica" size=-1><B>Interest rate</B></FONT></TD> <TD align="center" bgColor=#7394ad><FONT class=table-txt-a Color="#ffffff" face="Trebuchet MS,Arial,Helvetica" size=-1><B>Loan fees</B></FONT></TD> <TD align="center" bgColor=#7394ad><FONT class=table-txt-a Color="#ffffff" face="Trebuchet MS,Arial,Helvetica" size=-1><B>APR</B></FONT></TD> <TD bgColor=#7394ad><IMG height=1 src="rs_apr_files/0.gif" width=4></TD> <TD bgcolor="#000000"><IMG height=1 src="rs_apr_files/0.gif" width=1></TD> </TR> <TR> <TD bgcolor="#000000"><IMG height=1 src="rs_apr_files/0.gif" width=1></TD> <TD bgColor=#7394ad colSpan=6><IMG border=0 height=4 src="rs_apr_files/0.gif" width=1></TD> <TD bgcolor="#000000"><IMG height=1 src="rs_apr_files/0.gif" width=1></TD> </TR> <TR> <TD bgcolor="#000000"><IMG height=1 src="rs_apr_files/0.gif" width=1></TD> <TD bgColor=#df9f3b colSpan=6><IMG height=2 src="rs_apr_files/0.gif" width=1></TD> <TD bgcolor="#000000"><IMG height=1 src="rs_apr_files/0.gif" width=1></TD> </TR>  <TR> <TD bgcolor="#000000"><IMG height=20 src="rs_apr_files/0.gif" width=1></TD> <TD bgColor=#d8e1e7><IMG height=20 src="rs_apr_files/0.gif" width=4></TD> <TD align=left bgColor=#d8e1e7><FONT class=table-data face=Arial,Helvetica size=-1>Lender one</FONT></TD> <TD align="center" bgColor=#e7eff5><FONT class=table-data face=Arial,Helvetica size=-1>7.875%</FONT></TD> <TD align=right bgColor=#d8e1e7><FONT class=table-data face=Arial,Helvetica size=-1>$2,000 </FONT></TD> <TD align="center" bgColor=#e7eff5><FONT class=table-data face=Arial,Helvetica size=-1><B>8.087</B></FONT></TD> <TD bgColor=#e7eff5><IMG height=1 src="rs_apr_files/0.gif" width=4></TD> <TD bgcolor="#000000"><IMG height=1 src="rs_apr_files/0.gif" width=1></TD> </TR> <TR> <TD bgcolor="#000000"><IMG height=20 src="rs_apr_files/0.gif" width=1></TD> <TD bgColor=#f4faf9><IMG height=20 src="rs_apr_files/0.gif" width=4></TD> <TD align=left bgColor=#f4faf9><FONT class=table-data face=Arial,Helvetica size=-1>Lender two</FONT></TD> <TD align="center" bgColor="#ffffff"><FONT class=table-data face=Arial,Helvetica size=-1>8.000%</FONT></TD> <TD align=right bgColor=#f4faf9><FONT class=table-data face=Arial,Helvetica size=-1>$0 </FONT></TD> <TD align="center" bgColor="#ffffff"><FONT class=table-data face=Arial,Helvetica size=-1><B>8.000</B></FONT></TD> <TD bgColor="#ffffff"><IMG height=1 src="rs_apr_files/0.gif" width=4></TD> <TD bgcolor="#000000"><IMG height=1 src="rs_apr_files/0.gif" width=1></TD> </TR>  <TR> <TD bgcolor="#000000"><IMG height=1 src="rs_apr_files/0.gif" width=1></TD> <TD bgColor=#df9f3b colSpan=6><IMG height=2 src="rs_apr_files/0.gif" width=1></TD> <TD bgcolor="#000000"><IMG height=1 src="rs_apr_files/0.gif" width=1></TD> </TR> <TR> <TD bgcolor="#000000"><IMG height=1 src="rs_apr_files/0.gif" width=1></TD> <TD bgColor=#7394ad colSpan=6><IMG height=5 src="rs_apr_files/0.gif" width=1></TD> <TD bgcolor="#000000"><IMG height=1 src="rs_apr_files/0.gif" width=1></TD> </TR> <TR> <TD colSpan=2 rowSpan=2><IMG height=5 src="rs_apr_files/t-sw.gif" width=5></TD> <TD bgColor=#7394ad colSpan=4><IMG height=4 src="rs_apr_files/0.gif" width=1></TD> <TD colSpan=2 rowSpan=2><IMG height=5 src="rs_apr_files/t-se.gif" width=5></TD> </TR> <TR> <TD bgcolor="#000000" colSpan=4><IMG height=1 src="rs_apr_files/0.gif" width=1></TD> </TR> </TABLE></TD> <TD colSpan=4></TD> </TR> <TR> <TD colSpan=12><IMG height=20 src="rs_apr_files/0.gif" width=1></TD> </TR> <TR> <TD></TD> <TD colSpan=7><FONT class=2nd-lvl face="Trebuchet MS,Arial,Helvetica" size=-1><B>What APR doesn't do</B></FONT></TD> <TD colSpan=4></TD> </TR> <TR> <TD></TD> <TD colSpan=7><FONT class=text face=arial,helvetica size=-1>Although APR is the best way to compare mortgages, it still has two major drawbacks:</FONT></TD> <TD colSpan=2></TD> <TD rowSpan=3 vAlign=top><FONT class=pq color=#1c184d face=Verdana,arial,helvetica size=-2><B>Ask your broker or lender exactly which costs are included in the APR calculation.</B></FONT></TD> <TD></TD> </TR> <TR> <TD colSpan=10><IMG height=20 src="rs_apr_files/0.gif" width=1></TD> </TR> <TR> <TD></TD> <TD colSpan=7><FONT class=2nd-lvl face="Trebuchet MS,Arial,Helvetica" size=-1><B>Different fees in calculation</B></FONT></TD> <TD colSpan=2></TD> </TR> <TR> <TD></TD> <TD colSpan=7><FONT class=text face=arial,helvetica size=-1>Although we are required to show the APR, we may not use the same fees in the calculation. You should make sure the APRs that you are comparing use the same fees to do a true apples-to-apples comparison. <P></P> </FONT></TD> <TD colSpan=4></TD> </TR> <TR> <TD></TD> <TD colSpan=7><FONT class=2nd-lvl face="Trebuchet MS,Arial,Helvetica" size=-1><B>Not your true cost</B></FONT><BR> <FONT class=text face=arial,helvetica size=-1>APR calculates the total cost over the full term of a mortgage, but few people keep a mortgage for that long. <P>A typical mortgage might have a 30-year term, but you might only stay in the house for 5 years. <P>This means that the APR calculation includes interest that you will never pay and spreads the closing costs over too many years.</P> </FONT></TD> <TD colSpan=4></TD> </TR> <TR> <TD></TD> <TD colSpan=11><IMG height=32 src="rs_apr_files/0.gif" width=1> <A href="javascript:history.back()"><IMG src="cm_arm_files/tw_back.gif" alt=Back width=33 height=16 border=0></A> </TD> </TR> </TABLE>