Black homeowners are paying thousands more on their mortgages, putting them at a staggering loss when it comes time for retirement, a new study suggests.
Black mortgage borrowers pay $13,464 more on a home loan, including interest payments, mortgage insurance premiums and property taxes compared to White households, and it’s crippling their ability to save for retirement, according to the new MIT study, titled “The Unequal Costs of Black Homeownership.”
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The authors of the study, released this month, attributed higher interest rates, higher property taxes and a lack of refinancing opportunities for the disparity in mortgage buying for Black homeowners. As a result, Black homeowners can expect to pay up to $600 more a year, or a whopping $67,000 over the lifetime of a mortgage in lost retirement savings, the study found.
“In addition to the extra costs from higher mortgage interest rates and mortgage insurance premiums, recent research shows that Black homeowners pay more in property taxes than similarly situated white homeowners,” the authors wrote in the study.
Black homeowners face a 13% higher property tax burden compared to White households in the same jurisdiction, according to the study.
What’s more, Black homeowners are subject to paying higher interest rates as a result of allegedly being denied refinancing opportunities, the authors noted, explaining that when the Federal Reserve Board lowers interest rates, Black homeowners pay another $475 per year more than their White counterparts.
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“For historical reasons, Black homeowners on average have lower credit scores and lower down-payments and thus are disproportionately disadvantaged by risk-based pricing, and yet, that is the pricing system that predominates today,” the authors explained.