NEW YORK, NY — Mortgage refinancing may still lower costs for some homeowners, but Bankrate says many borrowers are leaving money on the table by taking the first offer they see. In its Hidden Homeownership Tax research, the personal finance company said 78.7% of refinance borrowers paid above the most competitive rate available to them in 2025.
Bankrate said that pattern typically cost overpaying borrowers $3,343 a year, or $278 a month. The company also said refinancing is not free: closing costs generally run 2% to 5% of the new loan amount, and any savings need to clear a break-even point before the refi truly pays off.
What The Numbers Show
Bankrate said its findings were based on analysis of 3.2 million mortgage originations. The company framed the data as evidence that comparing only one quote can be expensive, because one lender’s offer is not necessarily the market’s best rate. Its advice was to collect at least three quotes on the same day and compare annual percentage rates, not just the headline interest rate.
The article also used a refinance example to show how small rate changes can add up. On a $400,000 balance refinanced over 30 years, Bankrate said a quote at 6.8% could look acceptable, but a 6.5% offer from another lender might save about $80 a month and more than $28,000 over the life of the loan.
Why Refinances Miss
Bankrate said the biggest mistakes often come from treating refinancing as simple rate shopping. The company noted that fees can erase some of the benefit of a lower payment, especially when closing costs are rolled into the loan balance. It said a refinance can also reset the payment clock, which matters when a homeowner moves from an older loan into a new 30-year term.
The piece quoted Michele Sine of ImpactAdvisor, who said borrowers should think about the loan term, not just the rate. A shorter term can reduce total interest, while a lower rate on the same term mostly lowers the monthly payment. Bankrate also pointed out that cash-out refinances increase the loan balance and should be used for a specific purpose, not casual spending.
What Borrowers Can Check
Bankrate said lenders still check credit and debt levels on a refinance because it is a new loan, not a continuation of the old one. The company quoted Leslie Tayne of Tayne Law Group, who said borrowers with credit scores above 760 generally qualify for the best refinance rates. Tayne also said many lenders look for debt-to-income ratios below 36% for the lowest rates and for cash-out refinances.
The article said homeowners can refinance more than once, but each new loan can bring fresh closing costs and a lender may require a seasoning period before approving another refinance. Borrowers who were denied in the past can reapply after improving credit, lowering debt, or waiting for a higher appraisal value, and Bankrate said asking for the denial reason in writing can help avoid another unnecessary hard inquiry.
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