20 Fun and interesting mortgage facts!

Posted: May 4, 2017 at 7:29 pm

dog welcome homeSometimes, you want in-depth, meaningful blogs about home loans and the real estate market. But other times, you just want some rapid-fire fun mortgage facts to keep you informed and entertained!

Today is one of those times! So enjoy these 20 interesting mortgage and real estate facts:

  1. The first step to getting a mortgage is knowledge, but about half of Americans are stumbling! When asked about the basic criteria needed to get a mortgage loan, 50% of consumers were unable to provide answers.

 

  1. Buying a home for the first time is a crucial investment, yet when renters who plan to buy within the next five years were polled, 45% didn’t even know what their credit score needed to be to qualify.

 

  1. In fact, the average consumer thought that their score needed to be 652 to buy a home, much higher than the minimum of 620 required for Fannie Mae loans or FHA’s even lower requirements.

 

  1. People sometimes act like the sky is falling if interest rates nudge a bit higher, but our small and gradual rate increases are nothing compared to other periods in recent history when they were quite volatile. In fact, in 1987, rates jumped from 9.1% to about 11.4%, and in 1994, they spiked from 7.2% to about 9.4%!

 

  1. While it may seem like saving the down payment necessary to purchase a home is prohibitive, over the last three years, the average homebuyer put only 6% down.

 

  1. We’ve heard plenty of statistics about how bad the mortgage and real estate crash affected the housing industry, but here’s one more to put the crash and Great Recession in perspective: In 2009, there were more foreclosures than there were marriages.

 

  1. The oldest house in America is the Henry Whitfield House in Guilford, Connecticut, a stone American Colonial house built in 1639. It’s been a museum since as far back as 1899.

 

  1. How about the most expensive home ever sold? Currently, that record goes to 521 Round Hill Road in luxurious Greenwich Connecticut. The property, featuring 8 bedrooms, 8 full baths, 4 half baths, and 17,603 square feet on 40.26 acres, sold for $49,895,000 – just shy of $50 million!

 

  1. We’re guessing that the undisclosed buyer probably didn’t go to the bank and get a mortgage loan for that purchase. But if he or she did and put 20% down ($10 million), their estimated monthly mortgage payment including taxes and insurance would be about $243,930!

 

  1. But just because you can afford an opulent house, it doesn’t mean you need to buy one! That’s the example set by investment mogul and billionaire Warren Buffet. Despite being one of the richest men in the world, Buffet and his family still live in their modest home that he bought in 1958 for $31,500.

 

  1. Paying off your mortgage is a seminal event for anyone, but people often celebrate their freedom from a home loan in interesting ways. For instance, I Scotland, homeowners paint their front door bright red when they’re mortgage-free. The U.S. has our own quirky traditions, with a winged eagle plaque over the front door traditionally symbolizing that the home’s mortgage has been paid off. People have even been known to burn their last mortgage bill (after paying it), an act of defiance made popular when the TV character Archie Bunker did the same in the show “All in the Family!”

 

  1. It’s no surprise that the size of our homes has increased markedly over the decades. In fact, in the 1950s, the average home was just over 1,100 square feet, while 1,700 square foot houses were the norm in 1980. However, with the housing boom of the early 2000s, home square footage exploded up to well over 2,200 square feet for the average new home, earning the moniker “McMansions.”

 

  1. Even if your home is well short of that square footage, or you have an older home that is well less than 2,000 square feet in size, you’re still probably well ahead of most people in the world. In super crowded and exorbitantly expensive cities like Hong Kong or Tokyo, the average home (most people live in apartment-like “flats”) is about 400-500 square feet – basically two rooms and a tiny bathroom.

 

  1. While most loans are amortized (scheduled to pay off) over 30 years, you can clip a lot of time off the end of your loan by paying a little extra each month – saving you a boatload of cash in the long run! In fact, for the average $300,000 mortgage loan, paying just $100 extra each month will help you pay it off 5 years earlier, saving roughly $60,000 or more in interest. Doubling that to $200 extra will allow you to pay it off in about 21 years and 6 months and save more than $100k, and by paying $500 extra every month, you’ll essentially lop that 30 years in half and save almost $200,000 in interest!

 

  1. While it may not seem like the U.S. government is involved in the mortgage market, they play a huge role, directly and indirectly. Consider that 1 out of every 4 new residential mortgage loans is insured by the government and that our government buys 1 of every 6 residential mortgage loans, and they either own or insure 3 of every 5 mortgage loans in the U.S.

 

  1. Underwriters – the people who vet applicants for mortgage loan approval – follow very specific guidelines and criteria, although they may not always seem to make common sense. For instance, underwriters pay no credence to the fact that you paid off your last home loan completely or pay extra every month.

 

  1. While the amount of outstanding debt you hold and your debt-to-income ratio are vital to getting a home loan, underwriters often don’t worry about your accounts in collections. In fact, you can have a long list of unpaid accounts that have gone to collection agencies and it won’t usually affect your ability to get a new home loan!

 

  1. With record amounts of student loans in our country, the magnitude of educational debt is preventing a lot of young people from saving a down payment and buying a home. However, their student loans may not be quite as big of an obstacle as they may thing, at least from an underwriter’s viewpoint. That’s because student loan debt can typically be excluded from debt to income ratio if they are in deferment.

 

  1. During the dark days of the Great Recession between 2010 and mid-2012, there were record foreclosures and mortgage defaults. In fact, nearly 1 in 3 of all U.S. homeowners were underwater in equity, or about 12.8 million households. But the real estate market has gained value robustly since then. As of 2017, 48 million U.S. homeowners had positive equity in their homes. Even better, 13,125,367 U.S. homeowners were in an equity-rich position (loan-to-value ratio of 50% or lower), representing 23.4% of all U.S. homeowners!

 

  1. Nearly one out of every three (29.3%) of homeowners are mortgage-free, which means that 71% still have mortgages. That’s very high historically, as only 45% of homeowners had mortgages in 1960 and only 62% were paying a mortgage every month as of 1990.

 

 

 

 

 

 

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