Millions of Americans spend too much on mortgage interest and fees. The most likely to overpay will surprise you

You’d be reasonable to assume strong credit and a healthy income earns you the lowest possible mortgage rate. But exclusive new Bankrate research finds the most well-qualified mortgage borrowers overpay more often than other borrowers.

The borrowers most likely to overpay are conventional loan holders, middle-to-upper-income earners ($100,000 to $199,000), those with lighter debt loads and refinancers over 55. Our research finds that they’re losing thousands of dollars every year to inflated mortgage costs. 

Bankrate compared 3.2 million loans against the lowest rates available in our marketplace at the time to measure the scale of mortgage overpayments. We found mortgage overpayment is a widespread issue across the country: 87% of borrowers overpay for their home loans, regardless of their credit score, income or where they live. 

It stems from a common scenario among mortgage borrowers: failing to shop around. Nearly half of buyers consider only one lender, according to a 2025 National Survey of Mortgage Originations.

If you’re planning to buy, you can avoid overpaying by comparing mortgage rates and negotiating with your preferred lender if you see a lower offer, according to Joel Berner, a senior economist at Realtor.com. “If you don’t, you can find yourself overpaying,” he says. 

If you’re already a homeowner, you may be able to save money by refinancing if rates drop in the future — as long as you can avoid the costly mistakes of other borrowers.

These four groups are most at risk of overpaying for their mortgage

Bankrate’s research shows that borrowers with less debt, higher earners and conventional loan holders overpay at the highest rates because they typically fall into at least one of three common traps: failing to compare lenders, relying solely on a lender referral from a real estate agent or sticking with a previous lender out of loyalty or convenience. They may feel less pressure to hunt for deals than borrowers who feel more financially pinched. 

Refinancers, particularly those who are 55 and older, are hit just as hard by mortgage overpayments – even without the pressure of a tight closing deadline. Bombarded by lenders eager for business amid slowing demand, most choose the easy route and stick with their current lender. That convenience comes at a price, costing them nearly $2,400 a year.

One quick data caveat

Expect some overlap across these groups. Federal Reserve research finds a moderate correlation between higher incomes and stronger credit scores, and high earners and creditworthy borrowers are more likely to opt for conventional loans. Lower-income buyers, on the other hand, are more likely to turn to FHA loans for their flexible credit rules and lower down payments.

Higher-income borrowers 

Making a comfortable income doesn’t mean you’re automatically offered a competitive mortgage rate. Households earning $100,000 to $199,000 have a 90% likelihood of overpaying for their mortgage — the highest rate of any income bracket. Upper-income earners ($200,000 to $500,000) aren’t far behind, at an 89% overpayment rate, while lower-income buyers (under $50,000) fare better at 82%.

Over the life of a mortgage, that adds up. Six-figure earners pay between $82,323 and $192,626, on average, in excess fees and interest over a 30-year mortgage.

*Annual overpayments are calculated by dividing eight-year overpayments annually since that’s the average amount of time a homeowner holds onto their mortgage. Lifetime overpayment is the additional mortgage costs incurred over a 30-year home loan.

Housing experts say these differences likely come down to shopping habits. Lower-income buyers may be shopping around aggressively out of necessity and a fear of getting denied. Higher earners, however, may be prioritizing convenience and heavily relying on real estate agent referrals and trusting in their current bank.

“People who don’t shop likely have an existing [lender] relationship or have the income to where a small difference in the mortgage rate really doesn’t mean that much to them,” Berner says.

Borrowers with lower debt-to-income ratios

Borrowers with less debt, or healthier cash flow, are more likely to overpay – with 92% of them locking in above-market rates. Mortgage overpayment costs borrowers with lower debt-to-income ratios (defined as 33.1% to 38% of monthly income going toward debt) an extra $3,876 every year on average. 

For borrowers with lower DTIs, getting approved may feel like a more sure thing and, in turn, they may feel less urgency to compare offers. That financial security, however, comes at a price.  

What debt-to-income ratio do you need for a mortgage?

Lenders usually stick to the 28/36 rule, capping your housing costs at 28% of your income and total debt at 36%. If you have a lot of cash reserves, it can push that ceiling up to 50%, but keeping your debt low is still the easiest way to qualify and potentially score a lower rate.

High-debt borrowers (DTIs between 45.1% and 65%) overpay 85% of the time, compared to the 91% to 92% of borrowers with lighter debt loads. This isn’t because higher-debt applicants snag better interest rates. Rather, they more often secure the best rate available for their risk tier, which keeps their chances of overpaying a little lower.

“It’s completely plausible that they request more quotes as opposed to someone who is super prime and is probably going to get a reasonable quote at the first place they call,” says Alexei Alexandrov, a mortgage industry researcher and former chief economist of the Federal Housing Finance Agency.

Conventional loan borrowers

Nearly 70% of buyers choose conventional mortgages, according to a 2026 report from the National Association of Realtors. But borrowers who opt for this type of mortgage are also more likely to overpay, Bankrate’s research finds.

Conventional loan borrowers are slightly more likely to overpay for their loans compared to the general population (89% versus 87%), spending nearly a quarter (23%) of their loan total on unnecessary rates and fees over time. That’s significantly higher than FHA borrowers (83% overpay, losing 17%) or VA borrowers (81% overpay, losing 18%). 

Housing experts say the gap comes down to who each loan program is designed for, how those borrowers behave and how each program prices risk. Buyers on tighter budgets have the least financial room to absorb inflated costs, giving them every reason to shop around for their mortgage. Buyers with lower incomes, less wealth and lower credit scores are also more likely to opt for FHA or VA loans becuase of their flexible credit and down payment rules, according to the Urban Institute.

Unlike conventional loans, government-backed loans are exempt from risk-based fees known as loan-level price adjustments (LLPA). That means interest rates are more uniform for government-backed loans, though they still come with their own costs (mortgage insurance premiums and the VA funding fee).

“Rates will vary across different mortgage companies, but within the same lender, there is no reason they should charge you more for a 645 credit score versus an 800 [for an FHA loan],” Alexandrov says, referring to government loans’ exemption from LLPAs.

Conventional loans work differently. Their risk-based pricing trigger fees based on credit score, debt-to-income ratio, property type and down payment. Lenders tend to pass those costs to buyers as higher interest rates. So while a solid credit score will save you money on any mortgage, it plays an even bigger role if you’re opting for a conventional mortgage. 

Pre-retirement refinancers

Refinance activity slowed significantly in 2022 after interest rates began to rise, but it didn’t completely go away. Millions of homeowners refinanced between 2022 and 2025, and the majority of them (79%) overpaid for that refinance. 

Refinancers 55 and older overpay at a slightly higher rate (81%) — a problem magnified by the fact that older adults now make up the majority of American homeowners.

*Refinancers 55 and older overpay at a slightly higher rate than those ages 45 to 54, but both groups round to 81% when expressed as a whole number.

In theory, refinancing should come with a bit more breathing room than buying a home. You don’t have to jump on the perfect house, so you can set your own timeline, shop around for multiple quotes and push back on an initial rate. Yet older borrowers often stick with their current lender and don’t comparison shop, according to housing experts.

“If I had to guess, a bunch of people who are refinancing are just refinancing with their current lender or servicer, and they don’t even think about it twice,” Alexandrov says. “So from that perspective, I would expect them to shop less.” When asked what matters when picking a mortgage, nearly 6 in 10 buyers said having a prior relationship with the lender was important, according to a 2025 National Survey of Mortgage Originations. 

That loyalty often comes with a significant price tag, especially when lenders and mortgage brokers count on long-time customers not pushing back.

Older refinancers’ shopping behaviors can be especially influenced by aggressive sales tactics, according to Bankrate’s watchdog reporting. After speaking with more than a dozen loan officers, Bankrate found a consistent pattern: Older refinancers are often targeted by mortgage professionals using deeply personal sales tactics to coax them into expensive deals.

“Being a full-commission loan officer, you’re just so driven to, ‘How can I get these deals closed? How can I take a deal from another loan officer?,” said Loretta Cetkovic, a loan officer who has worked for a retail lender, a bank and a brokerage during her career. “And how do I find the kind of loopholes that are going to let me close this deal?’”

How to avoid becoming part of the 87% who overpay

Knowing who overpays is one thing, but staying out of that statistic is another. And it takes some strategy. These simple moves can help you secure a competitive mortgage and keep thousands in your pocket over the long run.

1. Shop with at least three lenders

Most buyers accept the first rate they are offered, often out of habit or convenience with their bank. But interest rates and fees vary significantly from one lender to the next. Gathering at least three preapprovals from a mix of lenders – like a commercial bank, a credit union and an online lender – is the only reliable way to know what the market can actually offer you. Be sure to request your preapprovals on the same day for the exact same loan type to get an accurate comparison. As long as you cluster your preapprovals within 14 to 45 days, credit bureaus will treat them as a single inquiry, according to the Consumer Financial Protection Bureau.

2. Make lenders compete and negotiate 

Once you have a few loan estimates in hand, study them and use them to negotiate. Lenders are often willing to shave down origination fees, drop processing charges or lower the price of discount points to win your business. Showing a lender a lower quote from a rival gives you leverage and could save you thousands of dollars a year, according to our research.

3. Look past the advertised interest rate

Pay attention to the annual percentage rate (APR), not just the interest rate. The APR factors in most loan-related costs, giving you a full view of what you’re actually paying. With mortgage rates elevated, watch out for quotes that sit well below national averages – there’s usually fine print requiring you to buy discount points upfront to get that rate. If a mortgage rate looks too good to be true, it likely is.

4. Consider refinancing if rates drop 

Rates are expected to keep rising in 2026 but moderate over the longer term, according to Fannie Mae’s September housing forecast. If mortgage rates drop, refinancing can offer relief provided the math adds up. Refinancing isn’t free; closing costs usually run between 2% and 5% of the total loan balance, even on deals marketed as having no-closing-cost.

To figure out if a refinance makes sense, divide your total closing costs by your expected monthly savings to find your break-even point in months.

Your break-even point (in months) = closing costs ÷ monthly savings

If you won’t stay in the home long enough to recover those upfront costs – ideally within 18 to 24 months – a refinance won’t pay off. And watch out for the clock reset: refinancing into a new 30-year term lowers your payment partly because you’re stretching the loan out longer.

• Methodology

  To determine who’s most likely to overpay for their mortgage, Bankrate analyzed 3.2 million HMDA mortgage loan originations and compared them against competitive offers available on Bankrate’s mortgage marketplace as of 2025.

  The analysis extracted data from four key sources: Bankrate’s proprietary mortgage marketplace data, the Home Mortgage Disclosure Act (HMDA) loan-level dataset, the Federal Reserve’s Survey of Consumer Finances (SCF) and loan-level disclosure data from Freddie Mac and Ginnie Mae. Together, these sources allowed us to account for competitive pricing, loan originations, borrower credit profiles and household wealth.

  To ensure a fair and accurate comparison, our statistical model controlled for 17 different factors that can influence loan pricing. Once loans were compared across datasets, we calculated four metrics:

  • • Overpayment rate (%): Estimated percentage of borrowers who received a mortgage with a higher total cost than a comparable, competitive offer available on the market at the time of their origination.

  • • Average eight-year overpayment ($): We calculated the full cost of the mortgage (all 30 years of interest payments, including upfront lender fees, discount points and lender credits) and subtracted the total cost of the matched, competitive Bankrate offer.

  • • Average annual overpayment ($): We divided the eight-year expected overpayment by 8. This reflects the average mortgage lifespan and captures front-loaded amortization costs (interest and fees) more accurately than a 30-year average.

  • • Average lifetime overpayment ($): We calculated the full cost of the mortgage (all 30 years of interest payments, including upfront lender fees, discount points and lender credits) and subtracted the total cost of the matched, competitive Bankrate offer.

  For more detailed information on the methodology and the analysis, see Bankrate’s research on the hidden homeownership tax.