Women are better than men at paying for mortgages, research shows
By Erik J. Martin
CTW Features
Men may earn higher wages than women, on average, but they’re not as good at managing that money – at least when it comes to mortgages, new research shows.
A new report from Washington, D.C.-based Urban Institute indicates that single female borrowers perform better than single male borrowers on the issue of making punctual mortgage payments. A single female borrower had a 5.8 percent probability of loan default compared to 6 percent for a single male borrower. Yet, despite being better at paying their mortgages, females tend to pay higher mortgage interest rates than their male counterparts: 5.48 percent versus 5.41 percent, respectively.
J. Keith Baker, program coordinator for Mortgage Banking & Financial Services and faculty member at North Lake College in Irving, Texas, says other studies shine a positive light on females and their home financing behaviors.
“Studies by Experian have shown as recently as this year that women have a slight edge in credit scores, but have been 8.1 percent less likely to be 60 days or more delinquent on their home mortgage as men are,” Baker says. “Additionally, on average, women have a mortgage balance that is 7.9 percent less than men.”
Baker’s own ongoing studies of millennials indicate that the older cohort of single millennial women are now choosing to buy their own homes, “and there is a statistically significant higher number doing so who have been married before and are now single,” Baker says.
Consider that 15 percent of homebuyers in 2016 were single women, per the National Association of Realtors.
“Of the hundreds of homes I’ve sold most recently, more than 30 percent were to single women of all ages,” says Liz Jones, Realtor with Jones Realty Group in Temecula, Calif. “And four of every ten homes I’ve ever sold have been to single women over the age of 50. They have good jobs and larger down payments.”
Joslyn Ewart, author of Balancing Act: Wealth Management Straight Talk for Women, says she’s surprised that lenders continue to get away with charging women borrowers a higher interest rate – despite their superior mortgage repayment record.
“Women tend to be more comfortable with longer-term investing than men, and the purchase of a home is a long-term investment, so women’s increasing interest in owning this type of asset makes sense,” Ewart says. “A home is a tangible asset that represents security and taking care of a family, which are important feminine values. Consequently, her mortgage is likely the first bill she will pay monthly.”
Additionally, “women are much better at contemplating the repercussions of their actions,” says Gillian Kindel, advisor with Mosaic Financial Partners, Inc. in San Francisco. “Women are more exposed to everyday stories and personal experiences of how a female friend or family member had to pull it all together and optimize limited resources. They know that ‘happily ever after’ is a myth perpetuated by a culture that wants to benefit from this fantasy.”
Experts say single women need to consider several things carefully before applying for a mortgage and purchasing a home.
“Carefully establish a realistic spending plan so you can determine how much you can afford to spend on a home and how much you need for a down payment,” Ewart says. “Also, be sure you have a high credit score to guarantee eligibility for the best mortgage interest rates, and shop around for a mortgage lender.”
In addition, work with a financial professional to plan best scenarios based on your unique circumstances, Kindel says.
“Also, don’t rely solely on what the bank is willing to loan you – the fact is that what they’re willing to offer you may be in excess of what is prudent,” Kindel says.
Ewart agrees.
“Never, ever overspend on the purchase of a home. No matter how perfect a home might seem, there’s always another out there equally perfect,” she says.
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