Source: The Motley Fool —
Mortgages have been in the news for the past few years, particularly during the initial phase of the COVID-19 pandemic when interest rates dove beneath the 3% mark. Today, they’re in the news again as interest rates rise and home sales slow.
While we keep one eye on the housing market, we thought it might be fun to take a peek at some of the weirdest, most interesting facts about mortgages.
1. Mortgages were not always available to everyday people
Today’s mortgage looks quite different than an early-1900s mortgage. Back then, a home buyer had to make a 50% down payment, and took out a mortgage with a five-year amortization period. In other words, buyers had only five years to pay the mortgage off in full. Making it tougher still, buyers made interest-only payments for those five years. At the end of those five years, the entire principal of the loan was due. The setup excluded most Americans from obtaining a mortgage.
2. A word with a dark origin
The word “mortgage” comes from the old French phrase “mort gaige.” Literally translated, mort gaige means death pledge. Once the mortgage is paid off, the loan dies.
3. Might as well be speaking Greek
CNN found that 33% of those surveyed do not know what “annual percentage rate” means. Further, 33% also believe that mortgage lenders are required to charge all borrowers the same fees. The reality is, APR represents the total amount a borrower pays for a mortgage (including interest and fees). And regarding fees, a lender can charge whatever it wants to charge for services like home appraisals and credit checks.
