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Women Offer Better Rates

By Selena Maranjian – Updated Feb 14, 2017 at 3:35PM

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Everyone isn't treated the same, by many mortgage brokers.

If you're in the market for a mortgage, you have several options. You might just trundle off to your local bank and apply there. Or you might call a bunch of banks and see which one quotes you the best rates. There are scads of major lenders out there, including Wells Fargo (NYSE:WFC), Bank of America (NYSE:BAC), Washington Mutual (NYSE:WM), Wachovia (NYSE:WB), and Countrywide Financial (NYSE:CFC). Take your pick.

But there's another option that not everyone knows about: the mortgage broker. What's the benefit of going this route? Well, the mortgage broker has access to a wide variety of lenders and can often find you a better interest rate and total package for your mortgage than you could on your own. He or she does charge you, but the (negotiable) fee can be well worth it. This is especially true for those with less-than-sparkly credit records, though anyone might benefit from a good mortgage broker. (Learn more about mortgage brokers in this introductory piece and in this article featuring a reader rebuttal.)

This much, I knew. But I just ran across some info that was news to me. A Ken Harney article pointed out the results of a study of 2,700 mortgage applications, and it turns out that female mortgage brokers tend to charge their customers less than male ones do. Keep this in mind if you find yourself deliberating between using the services of Ralph Jones or Millicent Flutterby. According to Harney, "Female brokers charged their customers an average $572 less than their male colleagues." The explanation? There isn't a clear one, but economist Susan Woodward, who conducted the study, suggested: "It appears to arise from the female brokers' lower inclination to exploit clueless borrowers."

Take note, though, that the broker's sex isn't enough of a factor in ensuring you'll get a good deal. Sometimes Ralph may save you more, fees included, than Millicent does.

Here are some other findings:

  • Applicants with flawed but not-so-terrible "A-minus" credit records pay $1,500 more on average to their brokers -- and that's in addition to the higher interest rates they're charged. Borrowers who live in relatively wealthy urban areas are charged about $500 more than those in poorer areas.
  • Across the wide range of borrowers, broker fees and total closing costs were lower when all expenses were rolled into the mortgage rate. (Harney explained that these are sometimes called "zero-point" or "zero-cost" loans.) The rate ends up being a bit higher, but the net savings for the borrower averaged $1,500.
  • Borrowers with a college degree paid, on average, $1,500 less in broker fees than those with just a high school education. Woodward speculated that those with less education are simply less sophisticated when it comes to financial matters and can more easily be charged higher rates.
  • Race matters, too. African-Americans were charged, on average, $500 more, and Hispanics $275 more.

Borrowing money to buy a home isn't a simple matter. Inform yourself as much as possible before you take the plunge, and you'll likely save yourself a lot of moola. You can find great tips on buying and selling homes by checking out our Home Center, which also features some special mortgage rates. And learn more about buying, selling, and maintaining a home in these articles:

The Motley Fool has kicked off its ninth annual Foolanthropy campaign! Nominate your favorite charities on our Foolanthropy discussion board through Nov. 6. For guidelines on what makes a charity Foolish, visit www.foolanthropy.com.

Longtime Fool contributor Selena Maranjian does not own shares of any companies mentioned in this article.

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