The composition of American households and families is evolving. The outdated notion that women are the co-borrower on a mortgage application is being challenged as more women are increasingly taking on the responsibilities of homeownership on their own. In 2020, single women comprised 19% of first-time homebuyers and 17% repeat homebuyers. In contrast, single men accounted for 11% of first-time homebuyers and 9% of repeat buyers, according to the National Association of Realtors®.
While more women are entering homeownership, their motivation and their approach to the home buying process are differences that the mortgage and real estate industries should be prepared to address.
According to Cultural Outreach, women approach the home buying process more carefully and cautiously than men. They often experience more financial challenges to achieve mortgage eligibility, which they approach with a “cost savings mindset.” Men see homeownership as an investment. Whether that is their primary reason to buy or because their purchase is another investment to add to their portfolio alongside stocks, high yield savings accounts, and retirement accounts.
Women fear being taken advantage of and not having a trusted advisor. However, they are prepared to do the research and spend time preparing to qualify for a mortgage. Mortgage originators can earn their business by being the trusted advisor they seek and empowering them with financial solutions to overcome any obstacles they face in the home buying process.
The gender wage gap slows down women’s financial progression
While women ended 2021 with a 57.9% participation in the workforce, there persists a gender wage gap which negatively impacts the ability of single women to become homeowners. According to the Bureau of Labor Statistics Usual Weekly Earnings of Wage and Salary Workers report, women 84 cents for every dollar earned by a man in Q4 2021. The wage gap was even more significant for Black and Hispanic women.
Although women earn less than men on average, they remain diligent in their savings and financial planning. Women acknowledge the financial responsibilities involved in purchasing a home and set themselves financial goals to achieve before they start their home buying process. Many women want to improve their credit, improve their financial well-being by paying down outstanding debt, and save for a sizeable down payment. However, attaining these goals is often challenging due to their lower income.
Providing a private-label FinLocker app to your female homebuyers will enable them to achieve their financial goals before applying for a mortgage. They can improve their credit health by tracking their credit score and monitoring their credit report. FinLocker categorizes the transactions in their bank and credit card accounts and provides a spending analysis to show where they are spending their income and identify where they can save towards saving for their down payment and closing costs with trackable goals. They can also create a personalized budget to pay down their debts to reduce their debt-to-income ratio. Homebuyers can monitor their progress towards mortgage eligibility with the readiness assessment, which perpetually analyzes their enrolled financial data, so they’ll know when they can get pre-qualified for a mortgage and start their property search.
Women tend to have increased caretaker experiences
Many single women homebuyers have caretaking responsibilities, such as caring for children or becoming the sole caregiver to an elderly parent. It can be challenging for single women to balance financially supporting their family and investing in their dream of being a homeowner.
Women have a higher rate of financing a home purchase with an FHA loan than any other loan product. Single mothers may need the additional financial support that down payment assistance programs provide low-income homebuyers to help them attain homeownership.
While single mothers will benefit from the time-saving financial management tools in their FinLocker, it’s also essential to provide an efficient digital mortgage experience to ensure they won’t be taking time away from their families. The FinLocker platform offers a seamless mortgage application, saving time for homebuyers, mortgage originators, and operation teams.
Helping women find a home that meets their needs
Women prefer to purchase a home near friends, family, and healthcare facilities more than men. Mothers also consider proximity to schools to make it easier to balance their career and child-rearing responsibilities.
FinLocker includes a property search to enable women to research sales prices, plan their homebuying budget, and begin their property search when they achieve mortgage eligibility. Providing women with tools to conduct their preliminary home search when it’s convenient to them will help them identify homes that meet their needs.
Women face higher mortgage rates and higher mortgage denials
Due to financial factors such as the gender wage gap, many single women have high debt-to-income ratios and a poor credit profile, resulting in a higher rate of mortgage denials than single men.
Men are significantly more likely to learn about financial planning from a young age. In contrast, women can benefit from their mortgage originator’s financial knowledge. Rather than leaving prospective homebuyers to self-determine when they have met loan requirements to pre-qualify for a mortgage, FinLocker can guide them through a personalized journey that will show them what they need to do and when they are mortgage eligible.
When women do overcome any financial barriers to homeownership, they emerge with higher credit scores and lower debt-to-income ratios when compared to single men. Despite the lower income level, single women also typically put down a larger down payment and default on loans less frequently than single men.
Minority women face additional barriers towards homeownership
On top of the financial obstacles that single women have to overcome in the homebuying process, minority women must overcome additional challenges. Many homebuyers of color face redlining, putting financial services and homeownership out of reach for minority individuals.
Black and Hispanic women often set a precedent for homeownership in their families. They are less likely to receive financial education or down payment gift money from their family than white female homebuyers. When they leave college, it’s often with a high amount of student loan debt, increasing their debt-to-income ratio and putting their credit at further risk.
These barriers, however, have not deterred Black and Hispanic women from becoming homeowners. In a 2021 report from the Urban Institute, between 1990 and 2019, Black women increased their homeownership rate by 5.6%, Hispanic women by 15.3%, and Asian women by 18.06%. In comparison, the homeownership rate of Black men declined by 8%, Hispanic men only increased by 3.2%, and Asian men increased by 5.0%.
How mortgage lenders improve communication during the mortgage process
While female faces representing all races are seen in the real estate industry, the mortgage industry has been slower to respond. Increasing the number of women in customer-facing roles at mortgage lenders will help improve the communication flow and reduce gender discrimination.
Women tend to use social media more than men, particularly Facebook and Instagram. They are more likely to follow brands on social media, so attract them to your mortgage and real estate business early in their decision process with advice and practical information on the mortgage process, money management, and homebuying.
As women continue to make gains in employment and as heads of households, more women will continue to achieve their homeownership goals. Providing financial tools, education and advice, a streamlined digital mortgage application, and a transparent loan process will make it easier for single women to become successful homeowners, whether young, older or from an underserved population.