Subject Line Ideas: Of chromosomes and mortgages
10 events insurance doesn’t always cover

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Feature Article:Of chromosomes and mortgages

Critical Reads:10 events homeowners insurance doesn’t always cover

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Sometimes, women are referred to as the “fairer sex.” If a woman is in a relationship, sometimes she’s called her partner’s “better half.” It’s hard to say why, exactly, this is the case – especially since the women’s movement has largely fought for men and women to be equals – but apparently, women are better at men when it comes to at least one real estate-related behavior.

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Of Chromosomes and Mortgages

Scientifically, there isn’t a big difference between women and men. At least not at the beginning of life. I’m no biologist, but what separates the two is, basically, one chromosome. You’re kind of stuck with the hand you’re dealt in your mother’s womb – two X chromosomes and you’re female, an X and a Y makes you a male.

Of course, the biological differences don’t end there. But now, according to one study, there’s a difference that comes later on in life.

Women are better at making their house payment on time.

According to a study by the Urban Institute, women are less likely to miss a mortgage payment than are men. The study of 30 million men and women from all walks of life, different socioeconomic backgrounds, etc., revealed that the probability of a man defaulting on a home loan is about 6 percent. For women, the figure is 5.8 percent.

So women are 0.2 percent less likely to miss a house payment.

If that doesn’t sound like that big a difference to you, you’re kind of right. A 2-percent difference would be 2 out of every 100 people, so that 0.2-percent difference is 2 out 1,000 people. To put that in perspective, if a community is, say, made up of 50,000 people, there will likely be 100 more men who miss a payment in that community than women. So, considering the big picture, as in extrapolating that 50,000-person community across all of America, what sounds like only a slight difference actually adds up.

The bigger issue is: Why the difference? And the even bigger issue is: Why does it matter.

According to a spokesperson with the Urban Institute, the study reveals that the system is inherently unfair toward women. Women are actually charged higher interest rates than men, presumably because they are considered a higher risk. So a study that shows they are actually a lower default risk flies in the face of conventional mortgage policy.

The spokesperson, Sheryl Pardo, said: “"This is the first step in saying the barometer is consistently not accurately predicting whether women are able to pay their mortgages.”

So why are women considered a bigger risk for default?

According to the Urban Institute, which is what’s known as a “think tank” that uses studies to try to influence policy, there are several reasons.

One is that women are more likely than men to secure mortgages that would be considered “subprime.” And those types of loans typically carry higher interest rates because they’re typically considered higher risk. Another reason, the study revealed, is that women heads of household tend to have higher debt-to-income ratios, which may or may not be related to the fact that they, on average, earn less income than their male counterparts.

Basically, the study contends, women’s indicators of risk are higher overall than men’s, but despite that, they are actually less likely to skip a payment. Which, more than a men-vs.-women thing, might lead to questions regarding the accuracy and/or fairness of the criteria used to determine risk.

In a nutshell, the study tells us that the “why” of women being considered bigger risks doesn’t bear out in real life. Which means that, what, the whole system is flawed?

It makes you think that the sometimes-criticized credit-scoring system is actually the best way of determining a mortgagee’s risk. If you consider that women are more likely to be denied a loan, based on their higher debt-to-income ratios and overall income for women heads of household, yet are less likely to skip a payment, it suggests that a more standardized measure, such as a credit score – which is what credit bureaus try to provide – might be a better measure of risk than all the other factors, such as down payments, debt-to-income ratios and so forth.

The bottom line is that men and women are separated by a mere chromosome, according to nature. But the statistics seem to suggest that other factors, at least when it comes to credit-worthiness, are creating a larger gap.

10 Events Homeowners Insurance Doesn’t Always Cover

One of the biggest expenses for a homeowner outside the monthly principal-and-interest payment is homeowners insurance. You have to have it, both because lenders require it and you should cover your you-know-what. But even though its required and expensive, it doesn’t cover everything. In fact, here are 10 events homeowners insurance typically doesn’t cover, via Credit.com.

How to Invest in the Millennial Housing Movement

It didn’t seem all that long ago that people were wringing their hands over Millennials – a huge demographic in numbers and spending power – were sitting out the housing recovery. What a change in direction recently, though, as now people are saying there will be a Millennial-led housing boom. This U.S. News & World Report article explains how one might invest in this Millennial housing movement.

5 Low-Cost Business Ideas for Teens

Face it, high-schoolers always seem to need money. If you’re a parent who wants to see them earn some AND learn a little bit about entrepreneurship along the way, helping them start their own business might be a great idea. And speaking of great ideas, this Nerd Wallet article gives you five of them for low-cost businesses for teens.

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