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3 Mortgage Facts That May Surprise You

By Nathan Hamilton – Apr 2, 2017 at 8:43PM

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Did you know these mortgage essentials?

The first mention of "mortgage" can be traced back to the 14th century, when it was written in a poem to describe marriage, not a home loan. This use is logical. The original meaning of "mortgage" is "dead pledge," which highlights why couples are together "Till death do us part."

In the video below, Motley Fool analysts Kristine Harjes and Nathan Hamilton talk about three other mortgage facts you may not have known -- but these facts might save you some money and trouble as you shop around for a mortgage.

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Kristine Harjes: A home is often the biggest purchase that a person makes in his or her entire life, and so when you're considering getting a home and getting a mortgage with it, it's very, very important that you have all of the facts at your disposal. At The Motley Fool, we decided to try to help and do some of that research for you, and in doing this, we came across a handful of very surprising facts, and today, we want to highlight three of them.

Nathan Hamilton: Sure. Yeah, we'll go with bite-size facts, keep it pretty nimble here. First one: If you've done your research, you're going to see this, but rates will vary pretty widely across states and across credit scores. So I looked specifically at the rate tables and so forth that we have on, and if you look at a 30-year fixed mortgage, the ranges were from about 4.19% to 5.06%. Now, you may be saying, "OK. That's less than 1 percentage point. What does it really matter?" On a typical mortgage, it's about $105 each month, which, of course, adds up over time. If you take the hundred dollars out of my pocket every month, I probably wouldn't be too happy, so it definitely does pay to do the research.

Harjes: Absolutely. It is surprising at first glance how much a small percentage can really mean.

Hamilton: I bet you if you actually go in and do more research and look at each lender, the fees are going to vary pretty significantly, as well, so this may understate it and even may overestimate it in some cases.

Harjes: Right, and the point being it's just very important to have full information at your disposal.

Hamilton: Yep.

Harjes: Another fact that we came across that could surprise our listeners is that paying an extra $100 monthly can knock about five years off your 30-year fixed mortgage.

Hamilton: Again, I mean, it aligns with exactly what we were talking about there. About 1 percentage point difference doesn't seem like a lot, but you could be debt-free on your home five years shorter. It's pretty meaningful when you look at, "OK, what can I do with those funds to invest for my future?" Paying down your debts as quickly as possible, and if you can do so with your single largest expense each month, which is your mortgage, it makes sense to do whatever you can to put those funds toward it.

Harjes: Exactly. There's not only the financial relief of not having that obligation anymore and that can put more money in your pocket for investing or however else you want to spend that money, but there's also a sense in pride of having paid off that mortgage.

Hamilton: Mm-hmm. Very much.

Harjes: We have one more fact that we found surprising that we wanted to share.

Hamilton: Again, this may be surprising for some, but there are ways to go with a $0 down payment mortgage. Now, whether or not you'll want to do it is up to your personal financial situation, but there are a few options out there. One is a VA loan, which is available to certain military members and so forth, and there are also what's called USDA, which is the US Department of Agriculture. You may be thinking, "What do they have to do with mortgages?" but there are USDA loans where outside of cities, some cities are in there, but more rural areas, there are some loans that are available with $0 down payments that you can use for a mortgage.

Harjes: Which is fairly surprising when you consider that many mortgages will require a 20% down payment.

Hamilton: Yeah, and I did some research checking to see if we qualify around here in D.C., and we don't.

Harjes: I'm not shocked at all.

Hamilton: Yeah. Yeah, this is not farm country out here.

Harjes: Yeah. Well, folks, if you're looking to do some more research and maybe find some more facts about mortgages that may or may not surprise you, please see There's a ton of great information there, as well as some helpful mortgage tools, including access to highly rated lenders with low rates. While you're there, also check out our free guide, "5 Tips To Increase Your Credit Score Over 800."

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