Editor’s note: This article is republished with permission from AOL Real Estate. View the original article: "When It Comes to Mortgages, Women Don’t Shop Enough."
By ANN BRENOFF
There’s a surprising new finding that says women get lousier mortgage rates than men, but not because of gender discrimination. It’s because, instead of shopping around for cheaper loans, they rely on the recommendations of friends.
To recap: When it comes to mortgages, women don’t shop enough.
The report, published in the Journal of Real Estate Finance and Economics, set out to explain why women were 32 percent more likely to get a subprime mortgage than men in a 2006 study. According to a team of researchers led by Florida Atlantic University’s Ping Cheng, the answer wasn’t discrimination because of gender or even income disparities.
Women pay higher rates because they are more likely to listen to friends’ recommendations, whereas men are more likely to shop around for the best deal.
"Our empirical test confirms that search effort is rewarded in (the) marketplace, and suggests that gender disparity in mortgage rates may be addressed by policies aimed at improving women’s financial literacy and search skills," the report summarizes.
It makes sense to Daily Finance columnist Laura Rowley. "It’s not surprising, because mortgage shopping can be incredibly complex, so we look to people we can trust to help make the decision," says Rowley. "But this is one area where you don’t want to get by with a little help from your friends."
Instead, she advises, call two mortgage brokers and a direct lender, preferably a local small or midsize bank, and try the following script: "Hi, my name is (X) and I’m in the market to buy a ($X) house, and I’m going to put down (X) percent.
"I’m getting three written estimates, and then I’m going to choose. Can you email me a cost-estimate worksheet stating all the fees and the interest rate?"
Be sure to get the estimates on the same day, as rates can change quickly. Also, don’t ask for rates and fees by phone; unscrupulous brokers will simply lowball their estimate to get you in the door, says Rowley.
For more tips on shopping for a mortgage, see these AOL Real Estate guides:
- Mortgage Shopping: What you Need to Know
- Home Design Can Trigger Memory Loss, Research Says
- Survey: Most Boomers Would Cover Kids’ Down Payment