When it comes to mortgages, many people limit themselves to payments and rates. While those are the basic elements that people normally focus on, there are many surprising facts about mortgages that give insight and a better understanding of how mortgages work. Below are seven surprising facts about mortgages that may surprise any lender/borrower:

The word “mortgage” actually derives from the old French word “mortgage,” which means “dead pledge.” The reason why the word had such a negative connotation traces back to the old Anglo-Norman law that stated the borrower or “pledger” taking the loan had to pay all the debt to become a homeowner. Since a large amount of money was involved in acquiring a home, it was linked to “mort” or death since home buying was seen as one of the riskiest purchases.

Interest rate has skyrocketed as high as 18.45% and as low as 3.31% in America. While the highest rate took place in October 1981, it’s a reminder that interests rates can jump up to crazy numbers. Although homebuyers have been recently enjoying low-interest rates that hover around 4%, it’s always in their best interest to keep up with the trends and news. With that said, if they can score a 3.31% interest rate that took place in November 2012, they’ve hit the jackpot of mortgages.

The 1970 inflation caused lenders come up with three kinds of mortgage rates: variable-rate, graduated-payment, and adjustable-rate. Since inflation made long-term fixed rates inconvenient to lenders, they came up with these three types that offered lower initial rates than the long-term ones.

Even famous people have mortgages and some of them struggle to pay those off. Celebrities who make millions of dollars end up losing their properties to foreclosure by not paying their mortgages. Former NBA player, Allen Iverson, ended up losing his $3 million property just three years after purchasing it since he couldn’t meet his payments. On the other hand, Facebook founder Mark Zuckerberg refinanced his mortgage rate from 1.75% to 1.05%, saving $1,981 a month. Like the root of its meaning, a mortgage is one of the riskiest transactions that one can make in his or her lifetime; therefore, no matter how much income one is earning it is always wise to look for ways to reduce those rates.

Speaking of refinancing, people can refinance their home loan anytime. Just like Zuckerberg, refinancing mortgage is possible, but has to be for the right reasons. If one sees the opportunity to reduce monthly payments, then refinancing makes sense. Keep in mind that if the difference is subtle, it’s not worth refinancing since it takes some work.

“Pretty Boy” Floyd was the hero of mortgage borrowers back in the 30s. The infamous 1933 bank robber, Charles Arthur “Pretty Boy” Floyd, used to destroy mortgage documents when he was robbing a bank as a way to help people unchain themselves from debt. As bizarre as it may sound, some people praised him for it.

American homeowners hold “mortgage burning parties” to celebrate their last mortgage payment. This ritual started back when the character, Archie Bunker, burned his mortgage document in one of the episodes of the 70s show, All in the Family. Some people keep up this 70s pop culture tradition while other celebrate it in different ways.

Sources
http://www.realtor.com/advice/finance/shocking-facts-about-mortgages/
http://www.encyclopedia.com/topic/mortgage.aspx