10 Weird Facts About Home Mortgages

As boring as they sound, mortgages have a fascinating history. 

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. 

4. Now that's an accomplishment

When a Scottish homeowner pays off their mortgage, they sometimes paint the front door red as a way to celebrate their accomplishment

5. A (very) short gilded age -- even without a mortgage

In the 1890s, deep in the heart of the "gilded age," the grandest addresses in the world were located on New York City's Fifth Avenue. The Astors, Vanderbilts, and Carnegies are just a few of the names who poured family wealth into building larger, more exquisite homes. A mere 30 years later, many Fifth Avenue homes were being torn down. At the time, it could cost up to $5 million a year to pay for mansion upkeep, taxes, and servants to keep the house running. In 1925, the Vanderbilt mansion was sold, demolished and replaced with a Bergdorf Goodman. 

6. Most of us need a mortgage

Only 12% of home buyers pay cash for a home. The other 88% take out a mortgage. 

7. Mortgage amounts vary 

The amount of mortgage a home buyer can borrow varies by county. For example, in the U.S., the maximum is typically around 97% (although there are exceptions). In the United Kingdom, home buyers can take out a mortgage for as much as 110% of a home's value. In the Netherlands, a borrower can land a mortgage for 115% of a home's value. 

8. The mortgage tax deduction is nothing new

Homeowners have been able to use mortgage interest as a tax deduction since 1894, when all types of interest were tax deductible. Today, mortgage interest is one of the few kinds of interest that can be deducted.

9. No, but thanks anyway

According to the New York Times, only about 50% of homeowners use the mortgage interest deduction at tax time. 

10. Oh, that Pretty Boy Floyd

While it may be an urban legend, this last weird fact is rather fun to imagine. In 1933, bank robber Charles Arthur "Pretty Boy" Floyd stopped long enough whilst robbing banks to destroy mortgage documents, thereby freeing other "everyday folks" with a mortgage-free existence. 

American mortgages change with the times. It will be interesting to see what the future holds for home loans.