Black Homeowners Pay $13,464 More on Their Mortgages, Study Says
- The ‘Black tax’ persists because of risk-based loan pricing
- Policy makers can reverse the negative impact, co-author says
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Black borrowers pay $13,464 more over the life of a home loan, with interest, mortgage-insurance and tax expenses higher than for their White counterparts, further hurting African Americans’ ability to save for retirement, according to a new study.
The biggest reason for the gap is the risk-based pricing found in most U.S. mortgages, which disadvantage Black borrowers because they tend to make smaller down payments and have lower credit scores, said the report’s authors, who include Ed Golding, former head of the Federal Housing Administration. The lower down payment also results in more Black homeowners paying mortgage insurance, the researchers found.