Millions of Americans Are Overpaying for Their Mortgage by $3,300 a Year

A recent study by Bankrate has revealed that millions of U.S. homeowners are likely overpaying for their mortgages by approximately $3,300 annually. The majority of borrowers, 87 percent, fail to secure the lowest mortgage rate available to them, simply because they do not shop around, and lenders lack motivation to direct them elsewhere.

Bankrate calculated a collective annual loss of $65 billion in mortgage overpayments from 3.2 million 2025 mortgage originations since 2022. The average U.S. borrower loses $78,186 in extra interest and fees over a 30-year loan due to these overpayments. Matthew Fellowes, Bankrate CEO, stated that competitive rates exist, but borrowers often fail to see them.

The severity of overpayment varies greatly across the country, with borrowers in Western and Southern metropolitan areas, such as Texas and California, paying rates significantly higher than their qualifying rate. Pennsylvania had the highest rate of overpayment at 90.2 percent, or about $3,000 per year, followed by Oregon at 90.1 percent, or approximately $4,000 per year.

Conversely, Iowa reported the lowest overpayment rate at 83.1 percent, or $2,000 annually. The highest lifetime tax percentages, representing overpayment amounts relative to loan balances, were observed in New Hampshire, Illinois, New Jersey, and Florida, all exceeding 22 percent. Despite regional and local differences, overpaying for mortgages is a widespread issue that could be avoided with some research.

Experts advise homebuyers to explore all their options before finalizing a mortgage deal, emphasizing that securing the best available rate can make the difference between homeownership and being priced out of the market, especially given the recent rise in mortgage rates. Bankrate advocates for market-based policy responses to address this issue, urging both homeowners and lenders to take action.