Rent vs. Buy
Buying and building equity
There's nothing like owning your own home. Buying a home can be a great investment - one that can offer great returns with moderate risk. Some of the advantages to home buying may include:
Your current situation may make renting more cost efficient for you, for example, if you move frequently. Once you compare the benefits of buying versus renting, it's easy to see the advantage of owning -the biggest of which may be the opportunity to build equity. You build equity by:
To get started down the path to homeownership, you can start your mortgage application online in just minutes. The process will then be completed with the help of one of our experienced Mortgage Consultants.
If you have any questions call 818-773-0033 to talk to one of our experienced Mortgage Consultants.
With a fixed rate mortgage, you never worry about your interest rate going up and raising your mortgage payment. That means you're able to budget more effectively.
With Fixed Rate mortgage products you can choose from a variety of mortgage repayment terms and enjoy a set interest rate for the life of your mortgage.
Compare Fixed Rate to Adjustable Rate Loans.
Are you ready for a new mortgage? Start your mortgage application here. This process will then be completed with the help of one of our experienced Mortgage Consultants.
If you have any questions call 1-800-248-4638† to talk to one of our experienced Mortgage Consultants.
Take advantage of adjustable interest rates
With an Adjustable Rate Mortgage (ARM), you experience a lower, fixed interest rate for a set period of time after which the rate adjusts based on financial markets for the remainder of the mortgage term. So, your monthly payments are lower during the fixed rate period, but may increase after that period.
At the end of the fixed rate period, your monthly payment will change as the interest rate changes. The rate changes over time according to a formula and an adjustment schedule. As an example, a LIBOR index (London Market Interbank Offered Rates) rate of 2.00% plus a margin of 2.25% results in a "fully indexed rate" of 4.25%. So if the base/index interest rate has increased when it is time for a scheduled rate adjustment, your interest rate and monthly payment will also increase.
Some ARMs have a reduced interest rate (start rate) for an initial period of time. This rate is less than the current index plus the margin (the "fully indexed rate"). This means that your interest rate and monthly payment will be lower than normal for that initial period, but are likely to increase when that period is over, even if the index rate does not change. Your interest rate and monthly payment will increase even more if the index rate rises.
Citi has a choice of ARMs with a variety of initial fixed rate periods. In addition, we also offer an interest only ARM where you only pay the interest on your loan plus any applicable taxes and insurance. An interest only mortgage requires payment of only the interest amount for the first few years of the loan. If the interest only payments are made, then at the end of the interest only period you can expect:
Compare Fixed Rate to Adjustable Rate Loans.
Are you ready for a new mortgage? Start your mortgage application here. The process will be completed with the help of one of our experienced Mortgage Consultants.
If you have any questions call 1-800-248-4638† to talk to one of our experienced Mortgage Consultants. Compare the benefits and risks of fixed and adjustable rates
Fixed Rate Adjustable Rate
Benefits
Risks
If you meet the qualifications, you may be eligible for a mortgage that requires little or no down payment. FHA (Federal Housing Administration) and VA (Veteran's Administration) mortgages are government-backed programs that offer fewer restrictions than conventional mortgages.
For first-time homebuyers and active or veteran military personnel, an FHA or VA loan can be a great mortgage solution with benefits that include:
FHA mortgages are available as both fixed and adjustable rate mortgages.The VA offers mortgages that are fixed rate only.
If you have any questions regarding a FHA or VA mortgages or want to know how to qualify, call 1-800-248-4638† to speak to one of our experienced Mortgage Consultants.
Reaching out to our communities
Citi has long been committed to making the communities in which it operates better. We live up to this commitment through a variety of community lending programs designed to extend the dream of home ownership to everyone.
Ask your Mortgage Consultant about our homeownership education and counseling programs by calling 1-800-248-4638†.
The cost of borrowing money is interest. Your interest rate, along with the term and amount of your mortgage, determines the size of your monthly principal and interest payment.
Interest rates vary across the different types of mortgages we offer, as well as how much you are borrowing compared to the value of the home. Interest rates may also vary based on other factors such as whether the home will be a primary or secondary residence.
You can "buy down" the interest rate on your loan by paying points. A point is calculated as 1% of the loan amount so if you are borrowing $100,000, 1 point is equal to $1,000. Buying down the rate can be a great option to reduce the total amount of interest you pay over the life of your loan.
APR (Annual Percentage Rate)
An Annual Percentage Rate (APR) shows the total annual cost of a mortgage (including closing costs, interest, fees and lender points) over its full term, expressed as a yearly rate.
APR is a good way to compare mortgages as it reflects the true cost of the loan.
If you have any questions or would like us to walk you through the various options, call 1-800-248-4638† to talk to one of our experienced Mortgage Consultants. Find the right down payment option for you
Saving enough money for a down payment is one of the biggest challenges to home buying. With a variety of approaches to choose from, we can help you understand and select a down payment option that best fits your situation. And that's important because the amount of your down payment impacts:
The standard down payment amount is 20% of the home's purchase price. Down payment amounts typically range between 3% and 20%, depending on the mortgage product. This amount is paid in cash to the seller. The higher your down payment, the lower your loan amount. For example, a 20% down payment on a $200,000 property is $40,000. Your mortgage loan amount on the $200,000 property would be $160,000.
If you don't have 20% to put down, you may apply for a mortgage that requires mortgage insurance - in addition to your regular payment, you pay a mortgage insurance company to insure the lender against nonpayment or default on a mortgage.
If you have any questions or would like us to walk you through the various options, call 1-800-248-4638† to talk to one of our experienced Mortgage Consultants. Compare the benefits and risks of fixed and adjustable rates
Fixed Rate Adjustable Rate
Benefits
Risks
Using points to reduce your interest rate or closing costs
Depending on available rates for your selected mortgage type, you may be able to pay discount points to decrease your interest rate or, if you prefer, you may be able to select a higher interest rate and receive a credit against closing costs, such as title insurance, appraisal and origination fees. Our Mortgage Consultants can work with you to determine which options are available for you.
Points are calculated as a percentage of the loan amount. For example, 1 point would be calculated as 1% of the loan amount. So if you are borrowing $100,000, 1 point is equal to $1,000. Points can be either positive (discount points) or negative (rebate points).
If you have any questions or would like us to walk you through the various options, call 1-800-248-4638† to talk to one of our experienced Mortgage Consultants. Protecting you and your lender
Escrow Account
As part of the mortgage closing, an escrow account can be established with the lender for payment of real estate taxes and insurance. The account is funded at closing and payments toward the account are made with each monthly mortgage payment (in addition to the principal and interest). The lender will use these funds to pay your property taxes and insurance premiums when they become due. Also known as Impound Account.
Insurance
There are typically 3 types of insurance policies involved in getting a mortgage and owning a home.
Simply put, closing costs/fees are the various costs associated with closing a loan - the final step in the home buying process when mortgage loan documents are signed. The different types of closing costs can include:
When you Apply, we'll send you a Good Faith Estimate within 3 days that outlines the different fees associated with your loan.
Mortgage Calculators for Home BuyingYou shouldn't be trying to squeeze into a mortgage - rather, a mortgage should fit into your financial situation. Use these mortgage calculators to find the home loan that best meets your home buying needs:
During your home buying research, use our comprehensive glossary to help you understand common mortgage terms that you may encounter.
View the Glossary in a new window
There's nothing like owning your own home. Buying a home can be a great investment - one that can offer great returns with moderate risk. Some of the advantages to home buying may include:
- Equity - over time you can build equity (the value of your home minus what you owe)
- Appreciation - your home can increase in value over time
- Ownership and the pride that goes with it
Your current situation may make renting more cost efficient for you, for example, if you move frequently. Once you compare the benefits of buying versus renting, it's easy to see the advantage of owning -the biggest of which may be the opportunity to build equity. You build equity by:
- Making a down payment
- Gradually paying off the principal amount of your mortgage
- Having your property appreciate over time
To get started down the path to homeownership, you can start your mortgage application online in just minutes. The process will then be completed with the help of one of our experienced Mortgage Consultants.
If you have any questions call 818-773-0033 to talk to one of our experienced Mortgage Consultants.
- Fixed Rate
- Adjustable Rate (ARMs)
- Fixed Rate vs. Adjustable Rate
- FHA & VA Loans
- Community Lending
With a fixed rate mortgage, you never worry about your interest rate going up and raising your mortgage payment. That means you're able to budget more effectively.
With Fixed Rate mortgage products you can choose from a variety of mortgage repayment terms and enjoy a set interest rate for the life of your mortgage.
Compare Fixed Rate to Adjustable Rate Loans.
Are you ready for a new mortgage? Start your mortgage application here. This process will then be completed with the help of one of our experienced Mortgage Consultants.
If you have any questions call 1-800-248-4638† to talk to one of our experienced Mortgage Consultants.
Take advantage of adjustable interest rates
With an Adjustable Rate Mortgage (ARM), you experience a lower, fixed interest rate for a set period of time after which the rate adjusts based on financial markets for the remainder of the mortgage term. So, your monthly payments are lower during the fixed rate period, but may increase after that period.
At the end of the fixed rate period, your monthly payment will change as the interest rate changes. The rate changes over time according to a formula and an adjustment schedule. As an example, a LIBOR index (London Market Interbank Offered Rates) rate of 2.00% plus a margin of 2.25% results in a "fully indexed rate" of 4.25%. So if the base/index interest rate has increased when it is time for a scheduled rate adjustment, your interest rate and monthly payment will also increase.
Some ARMs have a reduced interest rate (start rate) for an initial period of time. This rate is less than the current index plus the margin (the "fully indexed rate"). This means that your interest rate and monthly payment will be lower than normal for that initial period, but are likely to increase when that period is over, even if the index rate does not change. Your interest rate and monthly payment will increase even more if the index rate rises.
Citi has a choice of ARMs with a variety of initial fixed rate periods. In addition, we also offer an interest only ARM where you only pay the interest on your loan plus any applicable taxes and insurance. An interest only mortgage requires payment of only the interest amount for the first few years of the loan. If the interest only payments are made, then at the end of the interest only period you can expect:
- The original principal amount borrowed will still be owed.
- Payments will increase even if the interest rate stays the same.
Compare Fixed Rate to Adjustable Rate Loans.
Are you ready for a new mortgage? Start your mortgage application here. The process will be completed with the help of one of our experienced Mortgage Consultants.
If you have any questions call 1-800-248-4638† to talk to one of our experienced Mortgage Consultants. Compare the benefits and risks of fixed and adjustable rates
Fixed Rate Adjustable Rate
Benefits
- Your interest rate stays the same for the entire life of your mortgage.
- You know the amount of your monthly payments.
- Your start rate is usually lower than the interest rate on a Fixed Rate mortgage.
- Your interest rate may decrease or stay the same when it's adjusted.
Risks
- Your interest rate is usually higher than the start rate on an Adjustable Rate mortgage.
- The interest rate stays the same for the entire life of the mortgage, even if market interest rates decline.
- If the index increases, your interest rate and monthly payment will increase. There are limits on how much your rate can increase or decrease at each adjustment and over the life of the mortgage.
- If your start rate is less than the fully indexed rate, your interest rate and monthly payment may increase significantly at the first adjustment -even if the Index does not change. Your interest rate and monthly payment will increase even more if the Index rises.
If you meet the qualifications, you may be eligible for a mortgage that requires little or no down payment. FHA (Federal Housing Administration) and VA (Veteran's Administration) mortgages are government-backed programs that offer fewer restrictions than conventional mortgages.
For first-time homebuyers and active or veteran military personnel, an FHA or VA loan can be a great mortgage solution with benefits that include:
- Low down payments (FHA offers as low as 3% of the purchase price)
- Larger mortgages to finance larger homes
- Options for seller to pay the purchase points or closing costs
- Cash gift allowed for down payment
- Availability of 15 or 30-year term
FHA mortgages are available as both fixed and adjustable rate mortgages.The VA offers mortgages that are fixed rate only.
If you have any questions regarding a FHA or VA mortgages or want to know how to qualify, call 1-800-248-4638† to speak to one of our experienced Mortgage Consultants.
Reaching out to our communities
Citi has long been committed to making the communities in which it operates better. We live up to this commitment through a variety of community lending programs designed to extend the dream of home ownership to everyone.
Ask your Mortgage Consultant about our homeownership education and counseling programs by calling 1-800-248-4638†.
- Interest Rates & APR
- Down Payment Strategies
- Fixed Rate vs. Adjustable Rate
- Points
- Taxes & Insurance
- Closing Costs
The cost of borrowing money is interest. Your interest rate, along with the term and amount of your mortgage, determines the size of your monthly principal and interest payment.
Interest rates vary across the different types of mortgages we offer, as well as how much you are borrowing compared to the value of the home. Interest rates may also vary based on other factors such as whether the home will be a primary or secondary residence.
You can "buy down" the interest rate on your loan by paying points. A point is calculated as 1% of the loan amount so if you are borrowing $100,000, 1 point is equal to $1,000. Buying down the rate can be a great option to reduce the total amount of interest you pay over the life of your loan.
APR (Annual Percentage Rate)
An Annual Percentage Rate (APR) shows the total annual cost of a mortgage (including closing costs, interest, fees and lender points) over its full term, expressed as a yearly rate.
APR is a good way to compare mortgages as it reflects the true cost of the loan.
If you have any questions or would like us to walk you through the various options, call 1-800-248-4638† to talk to one of our experienced Mortgage Consultants. Find the right down payment option for you
Saving enough money for a down payment is one of the biggest challenges to home buying. With a variety of approaches to choose from, we can help you understand and select a down payment option that best fits your situation. And that's important because the amount of your down payment impacts:
- Your loan product eligibility
- Your loan amount and size of your monthly payments
- The amount of cash available for other home buying costs
The standard down payment amount is 20% of the home's purchase price. Down payment amounts typically range between 3% and 20%, depending on the mortgage product. This amount is paid in cash to the seller. The higher your down payment, the lower your loan amount. For example, a 20% down payment on a $200,000 property is $40,000. Your mortgage loan amount on the $200,000 property would be $160,000.
If you don't have 20% to put down, you may apply for a mortgage that requires mortgage insurance - in addition to your regular payment, you pay a mortgage insurance company to insure the lender against nonpayment or default on a mortgage.
If you have any questions or would like us to walk you through the various options, call 1-800-248-4638† to talk to one of our experienced Mortgage Consultants. Compare the benefits and risks of fixed and adjustable rates
Fixed Rate Adjustable Rate
Benefits
- Your interest rate stays the same for the entire life of your mortgage.
- You know the amount of your monthly payments.
- Your start rate is usually lower than the interest rate on a Fixed Rate mortgage.
- Your interest rate may decrease or stay the same when it's adjusted.
Risks
- Your interest rate is usually higher than the start rate on an Adjustable Rate mortgage.
- The interest rate stays the same for the entire life of the mortgage, even if market interest rates decline.
- If the index increases, your interest rate and monthly payment will increase. There are limits on how much your rate can increase or decrease at each adjustment and over the life of the mortgage.
- If your start rate is less than the fully indexed rate, your interest rate and monthly payment may increase significantly at the first adjustment -even if the Index does not change. Your interest rate and monthly payment will increase even more if the Index rises.
Using points to reduce your interest rate or closing costs
Depending on available rates for your selected mortgage type, you may be able to pay discount points to decrease your interest rate or, if you prefer, you may be able to select a higher interest rate and receive a credit against closing costs, such as title insurance, appraisal and origination fees. Our Mortgage Consultants can work with you to determine which options are available for you.
Points are calculated as a percentage of the loan amount. For example, 1 point would be calculated as 1% of the loan amount. So if you are borrowing $100,000, 1 point is equal to $1,000. Points can be either positive (discount points) or negative (rebate points).
If you have any questions or would like us to walk you through the various options, call 1-800-248-4638† to talk to one of our experienced Mortgage Consultants. Protecting you and your lender
Escrow Account
As part of the mortgage closing, an escrow account can be established with the lender for payment of real estate taxes and insurance. The account is funded at closing and payments toward the account are made with each monthly mortgage payment (in addition to the principal and interest). The lender will use these funds to pay your property taxes and insurance premiums when they become due. Also known as Impound Account.
Insurance
There are typically 3 types of insurance policies involved in getting a mortgage and owning a home.
- Title Insurance
Lender's Title insurance is used to protect lenders against any title disputes that may arise in the future.
Owner's Title insurance is used to protect home buyers from any title disputes that may arise in the future.
Your Mortgage Consultant ensures the title work is ordered as soon as possible. The title insurance policy is used to confirm the legal status of the lien on the home you're buying and to prepare the closing cost documents.
- Homeowner's Insurance
Homeowner's insurance protects you in the event of property damage caused by a fire or a severe rainstorm, as well as theft, vandalism, and stolen cash and personal items.
The more coverage you want, the higher your monthly premium will be. If a catastrophe does happen, homeowners insurance should cover the costs to rebuild your home. If you live in an area that's prone to natural disasters, like earthquakes and floods, you'll need separate policies.
Flood hazard insurance protects homeowners with buildings located in a federally identified flood hazard area.
- Mortgage Insurance
Mortgage Insurance or Private Mortgage Insurance (often called MI or PMI) is an insurance policy that protects the lender against nonpayment or default on your mortgage. When buying a home, if you do not put down at least 20% of the purchase price, we typically require you to purchase mortgage insurance. Mortgage insurance payments are included in your monthly payment.
It may be possible to cancel mortgage insurance at some point, such as when your loan balance is reduced to a certain amount. For loans on single family principal residences, federal law requires automatic termination of mortgage insurance for many borrowers when their loan balance is scheduled to reach 78% of the original property value.
For some customers, a combination 1st and 2nd mortgage is an alternative to paying for mortgage insurance. With this combo loan, you typically get a 1st mortgage for 80% of the purchase price, a 2nd mortgage for 10% of the purchase price, and put down 10%.
Simply put, closing costs/fees are the various costs associated with closing a loan - the final step in the home buying process when mortgage loan documents are signed. The different types of closing costs can include:
- Prepaid charges - These are the
lender-charged fees that are paid to cover the costs of processing your loan.
Typically, we charge an application fee to cover costs associated with checking
your credit, underwriting your loan, as well as other services provided to
prepare for your closing. These charges are included in the APR
calculation.
- Third party costs - These are fees that are
paid to third parties performing services in connection with the closing of your
loan, such as to a title company to obtain a title insurance policy on the home
or to an appraiser to ascertain the value of the home.
- Escrow reserves - Typically, we require you to put a certain portion of funds in your escrow account at closing to ensure there is enough to pay your taxes and insurance when they are due. Thereafter, additional escrow amounts will be collected with each monthly mortgage payment.
When you Apply, we'll send you a Good Faith Estimate within 3 days that outlines the different fees associated with your loan.
Mortgage Calculators for Home BuyingYou shouldn't be trying to squeeze into a mortgage - rather, a mortgage should fit into your financial situation. Use these mortgage calculators to find the home loan that best meets your home buying needs:
- Calculate your monthly mortgage payments
- Calculate how much home you can afford
- Calculate how much you could save with additional payments
During your home buying research, use our comprehensive glossary to help you understand common mortgage terms that you may encounter.
View the Glossary in a new window
