The refinance ‘Seniority Tax’: How a flawed system and aggressive lenders leave older homeowners overpaying for their mortgage

Andrew Pentis

Wed, August 5, 2026 at 4:00 PM GMT+3 24 min read

When longtime mortgage loan officer Hillary Moussali worked at a local Chase bank branch, an elderly man walked in holding a mail advertisement with the bank's name, promising "super low" refinancing rates.

"I read the fine print, which he probably couldn't even see," said Moussali, who worked as a loan officer for Chase from 2016 to 2021. "If he had just called the 1-800 number, who knows what they would have charged him."

There's a good chance they would've charged him thousands of extra dollars in unnecessary costs, according to new Bankrate research that finds a costly "Seniority Tax" is consistently imposed on older refinancers. The Seniority Tax is a targeted example of a wider Hidden Homeownership Tax revealed by our research — the systemic overpayment by American mortgage borrowers.

The Hidden Homeownership Tax

Read more about how the Seniority Tax plays out, along with similar overpayment consequences for other groups of people.

Full report

New Bankrate watchdog reporting sheds light on a perfect storm contributing to this Seniority Tax: A stalled housing market has lessened mortgage demand, and lenders have sought to replace it with revenue from mortgage refinancing. Older Americans, meanwhile, are among the most attractive prospective refinancing customers for lenders — they comprise the majority of homeowners and are sitting on record amounts of equity that could be tapped via cash-out refinancing.

Our reporting — based on interviews with 14 home loan professionals and industry insiders, as well as recent analyses of the Consumer Financial Protection Bureau (CFPB) complaint database — shows how the Seniority Tax isn't a coincidence. It's also a result of a deeply-ingrained industry culture that prioritizes selling loans over what's in people's best interest.

This group faces heightened risk of being talked into refinancing when it's unwise, with some mortgage professionals deploying deeply personal tricks and tactics in pursuit of commission — we're no longer talking about simple mailers with the promise of savings in an all-capped red font. One loan officer who made cold calls to older homeowners says she was pressured to convince them to refinance, in part by promising a skipped payment they could use for a "trip to visit their grandchildren."

Being pressured to refinance — whether to an extended term on a cash-out refi or a higher interest rate on a rate-and-term refi, to name a couple common examples — can have serious consequences: Using Hidden Homeownership Tax data, we estimate the Seniority Tax on refinancing could cost homeowners over $52,000 on average over a 30-year mortgage term. While a decades-long term is rarely wise for an older borrower, it does happen, even to seniors who are deep into their original loan's payoff, our CFPB analysis shows. Because the costs of overpayment can play out over years, even decades, it's not just the older homeowner who's impacted — their heirs could lose value from an eventual home sale.

Despite all of that, mortgage refinancing can be a good solution for older homeowners, whether it's a cash-out refi to tap equity for pressing expenses or rate-and-term refi to lower monthly or long-term payments. But they'll need to avoid the Seniority Tax and shady sales tactics first.

Have you or an older family member experienced predatory lending practices from a mortgage refinancing lender?

If you're willing to share your story in the service of others — or just want to vent — please email apentis@bankrate.com.

Data: Mortgage refinance overpayment steadily rises with your age

Ideally, the older you become, the stronger your financial position. You're likely to have amassed equity in your home, and research shows your credit score is much stronger than younger generations' averages. You should — should being the operative word — be able to borrow at the lowest cost possible.

That's partly why the Seniority Tax is so befuddling. New Bankrate data, building off of our Hidden Homeownership Tax report, shows that the likelihood — and amount — of mortgage refinancing overpayment rises with the applicant's age.

In fact, borrowers who are 55 and older overpay by nearly $2,400 per year on mortgage refinancing — or about $400 more than the tax 35-and-under borrowers face.

Applicant age group

Overpayment rate

Average spread between offered interest rate (basis points)

Average 8-year overpayment

Average lifetime overpayment

Under 35

72%

$15,855

$48,956

35 to 44

76%

$20,279

$59,727

45 to 54

81%

$22,378

$62,559

55-plus

81%

$19,034

$52,108

Source: Bankrate analysis, based on 2025 Home Mortgage Disclosure Act data.

A data caveat to consider

The dollar-and-cents impact appears to diminish as you age — but older homeowners are likely to have smaller loan balances than younger peers. They're also more likely to live on fixed incomes, so a $19,000, 8-year hidden tax for a senior can be far more costly than a $20,000-to-$23,000 tax for someone in their 40s, perhaps during the highest-earning years of their career. See our methodology below.

Focus on the average interest rate spread. That's the margin between the interest rate an average borrower secured and the best rate available to them when they closed on their loan, according to Bankrate's research. As an example, that could mean being quoted a refinance rate of 6.75%, not 7.76%. And that could result in an approximate $49,000 in hidden taxes for a mortgage balance of $197,090, the average for Baby Boomers. Here are the monthly and overall costs for two borrowers — the first is avoiding the Hidden Homeownership Tax altogether and the second is subject to the Seniority Tax.

Loan 1: Getting a competitive rate

Loan 2: Facing the Seniority Tax

Interest rate

6.75%

7.76%

Monthly principal-and-interest payment

$1,624

$1,759

Overall cost of repayment

$460,196

$508,802

Assumes a 30-year fixed loan term and the average U.S. loan balance for Baby Boomer borrowers (ages 61 to 79) of $197,090, according to Experian.

This new reporting confirms what we found in the Hidden Homeownership Tax report — that, in 2025, borrowers 55 and older were more likely than younger borrowers to refinance into higher-cost loans than their financial profiles entitled them to — and that they paid more than younger peers as a result. As a result, they paid a larger share of their loan balance in excess interest over the life of the mortgage. On average, this estimated lifetime Seniority Tax was equal to roughly 19% to 20% of their loan balance.

Bankrate's findings are consistent with…

Federal Reserve Bank of Philadelphia research from 2026 found that older borrowers who refinance tend to receive slightly higher interest rates, particularly for loans sold to Fannie Mae and Freddie Mac.

Aggressive lenders aim to 'sell refi' to seniors

In 2025, refinancing of primary mortgages reclaimed the top spot as the most popular mortgage product among people 55 and older, according to HMDA data. Lenders with large floors of commission-chasing mortgage loan originators — not your average credit union, community bank or even local lender or broker — are most likely to seize on the opportunity to sell refinancing to this sizable audience, our sources say.

"A lot of these call-center lenders, their whole thing is they have a team of people that sit on the phone and call all day long," says Michael Parker, a manager at a wholesale mortgage broker based in North Carolina. "That's all they do."

And you don't even need to already have a loan with the lender. As Parker explains, these lenders can access public records showing your loan balance and which company is servicing your mortgage. A caller might say something like, "I'm calling about your loan with so-and-so lender," without actually being affiliated. He says anyone of any age can be targeted by these tactics, but older adults are especially vulnerable.

"They act like they are with that company and gain trust," Parker adds. "That's another tactic of some of these less-than-truthful companies."

The 2025 Homebuyers Privacy Protection Act bans mortgage trigger leads — credit-bureau alerts that were previously sold to third-party lenders after someone applied for a loan — so scammier refinancing lenders should have a harder time harvesting data for pushy sales calls. "But [the ban] is not the silver bullet that will stop all unwanted telemarketing calls from lenders," to say nothing of the lenders' tricky tactics, says National Consumer Law Center senior attorney Patrick Crotty.

In fact, similar practices are playing out every day at even large, name-brand lenders, according to our reporting. Five ex-loan originators who worked on refinancing at one national lender say internal guardrails were cast aside to "sell" older people refinancing even if it wasn't in their best interest. Enticements included one or two skipped monthly payments, an escrow "refund," or cash out for borrowers who had ample savings.

Lenders "all have the same mentality at the end of the day": Find an angle or pitch that leads to more sales, says veteran loan officer Justine Fees, who's worked for six different mortgage companies.

One experienced loan professional (who, like a few others in the story, was granted anonymity given her ongoing career in the industry) tells Bankrate that at least one of her former lenders pushed her to employ ethically questionable sales tactics that targeted seniors.

"They would say, 'Tell them… they at least get to skip a payment and they can [pay for] a trip to visit their grandchildren," she recalls.

In other cases, an older borrower might be told refinancing is a seamless solution to accessing cash.

"Now, there are excellent reasons to do cash out," the experienced loan officer says of cash-out mortgage refinancing, "but they would encourage us to sell it to someone with plenty of money in the bank."

Refinancing your home loan when you don't need to could be harmful, particularly if you're a senior on a fixed income. Consider scenarios where you pay high closing costs, switch to a higher interest rate (especially for a rate-and-term refi), or opt to lengthen your loan term. Any of these mortgage modifications can be expensive, immediately and over the long haul.

One loan officer-turned-broker says older homeowners are particularly vulnerable to "snake oil" benefits of refinancing. One example is an escrow "refund" — or a return of the cash remaining in your old mortgage's escrow account. In reality, that money is typically returned when you refinance — and goes right back into the escrow account for your new mortgage.

Other angles used by loan officers and brokers to sell refinancing are designed specifically to target seniors who prioritize family in their financial decisions: They might be convinced to suffer a higher interest rate for a shorter loan term that will increase their odds of bequeathing a paid-off home, for example. Alternatively, they might be advised that tapping their home equity via higher-rate cash-out refinancing could help a grandchild pay for college. With value propositions like these, the experienced loan officer says, older homeowners are less likely to question an increased interest rate or four to five figures in closing costs.

In an industry where mortgage loan professionals are paid to close, not get you the best deal, even the most up-and-up lender may convince borrowers to refinance under false pretenses, perhaps at the risk of overpayment.

"Humans are humans, and we're going to figure out a way around that," the loan officer-turned-broker says. He adds: As long as a refinance was considered legal, one of his past lenders told him the lack of real benefits to a senior homeowner "doesn't matter. 'You pass the federal test, you're good to go. It's on the client to say no.'"

Consumer complaints allege 'elder abuse,' 'unfair treatment'

Bankrate's review of nearly 800 refinancing-related CFPB complaints from "older Americans" — defined by the CFPB as borrowers who are 62 or older — shows at least some people come to regret the transaction. The complaints also detail deceptive sales tactics, from promising (but not delivering) better terms to hiding costlier rates, sometimes in exchange for incentives that don't actually exist.

While younger homeowners also report mortgage refinancing-related problems, older Americans' issues consistently relate to how they were treated based on their age. Detailed complaints from actual homeowners over the past two years use phrases like "elder abuse," "manipulated" and "treated unfairly."

When using the CFPB's complaint form, consumers select specific categories that most closely relate to their issue. Here are the most common types of complaints from older Americans related to applying for or refinancing a mortgage:

Complaint type

Percent of complaints

Example complaint

Trying to communicate with the company to fix an issue with the application process

29%

"Three months ago I submitted a request for information on refinancing a mortgage. After submitting my request, I was immediately inundated with harassing phone calls. Even though most have stopped, the lender continues to harass me with dozens of calls per day from different numbers." — An older Georgia homeowner in May 2026

Application denials

16%

"I have been teased with refinance loans and information to fill out, yet be denied constantly because of [my] credit score." — An older Virginia homeowner in December 2025

Changes in loan terms during the application process

13%

"The refinancing resulted in a very modest reduction of less than $150 in my monthly mortgage payment. While this initially seemed beneficial, it came at the considerable cost of resetting my mortgage term to 30 years. At the time of refinancing, I had only eight years remaining on my original mortgage. This extension of 22 years means that, despite a small monthly saving, I will ultimately incur an additional cost of approximately $390,000 over the life of the loan… I was not made aware of these substantial implications at the time of the refinancing, and I certainly did not anticipate such a drastic alteration of the loan term." — An older Missouri homeowner in November 2025

Delays in the application process

13%

"This company gave me low-ball interest rate quotes to lure me into application. They ask[ed] for [my] credit card very quickly so they could get [the] appraisal done… They stalled the process, and when I decided to go with another lender, the[y] basically held me by not transferring the completed appraisal to my new loan company… They are punishing me and keeping me from finishing the loan process with the other lender." — An older California homeowner in May 2024

Confusing or misleading advertising or marketing

11%

"We received a call from [the lender] saying there were issues on our original mortgage and they would be sending paperwork to us to fix it. I checked with our local [originator]… and she recognized that they were trying to get us to refinance… Different loan people [from the lender] called almost every day asking why I hadn't returned the paperwork, and I told them they weren't going to trick us into refinancing with them. I feel it was elder abuse and maybe loan fraud to approach us like they did." — An older Indiana homeowner in November 2024

Fees or costs during the application process

"I was called by [the lender] to refinance my property and receive a cash-out. I also had d[one] some shopping around. The mortgage broker promised a lot of items that, as [of] today, I now know that they were not true. He did not disclose about the points that they would charge…I called the VA mortgage section, and they said what was done was not right but illegal, and [the] VA was not told about that excessive number of points. I would have never agreed to this. I was exploited and [a] large amount of money that should have come to me went to them." — An older Indiana homeowner in January 2024

Mortgage brokerages, which shop for lenders on behalf of borrowers, are also accused in consumer complaints of swaying senior homeowners toward refinancing without real benefits.

Kyle Brunet, an experienced loan officer-turned-broker, says "ethical standards are compromised" as brokerages, particularly those helmed by ex-retail loan officers who were trained to sell refinancing aggressively, have prioritized volume above all else.

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? And how do I find the kind of loopholes that are going to let me close this deal?'

— Loretta Cetkovic, who has worked for a retail lender, a bank and a brokerage in her loan origination career, speaking generally about peers' possible motivations

Most loan professionals aren't 'out to get' older people

Just as not all homeowners are gullible consumers, not all loan professionals are willing to ignore their consciences. For all the loan officers and brokers who tell Bankrate of industry and employer pressures to close at any cost, many say helping seniors through the refinancing process is part of why they enjoy their job. Veteran loan professional Justin Nooner, for example, talks fondly of helping an elderly homeowner execute a refinance that saved them $100 per month — money they could use to buy prescription drugs instead of using a credit card. "But the [loan professionals] that care," Nooner says, "it almost always seems like you are persuaded not to care nearly as much."

What else contributes to higher refinance costs for seniors

Our reporting suggests a mix of factors — from trust in familiar lenders and shopping habits to exposure to misleading application processes — may make some older homeowners more likely to end up with a more expensive refinance, or one they don't need at all.

How banks turn familiarity into a refinance pitch

Research shows older homeowners are likely to maintain longer relationships with traditional financial institutions, perhaps due to a preference for familiarity. As a result, many might respond more favorably to cross-selling.

What is cross-selling, and what does it have to do with mortgage refinancing?

If you have savings and checking accounts with a bank, for example, it may alert you to its other products, anything from car loans to, yes, mortgage refinancing. And if you have a desire to keep your finances "under one roof," you might opt for the perceived convenience.

Nick Ohanian, who doubles as a mortgage broker and real estate agent in Arizona, says banks consistently succeed at cross-selling refinancing to consumers who value ease over the best price.

"It's, 'Hey, you're already banking with us, we're going to flood you with a whole bunch of advertisements about also getting a mortgage,'" Ohanian says. "And people believe that it's going to be an easier process because 'they already have all my [information].'"

The reality: If you choose to refinance your mortgage with your current bank — perhaps because they nudged you over email, on the phone or via your mobile app — you'll complete the same application process as you would with any other lender. What's marketed as "easier" is usually a negligible difference, other experts agree.

"The difference in convenience is like a difference of 15 minutes versus 20 minutes," says Brunet.

And a few minutes of savings, perhaps over the phone or with a partially pre-filled loan application, isn't worth the possible consequence of overpaying on your mortgage because you didn't shop around.

When aversion to technology wins out over shopping around

Philadelphia Fed research shows older adults are less likely to shop around because it can be physically or mentally draining. Some may be used to the brick-and-mortar bank experience and less comfortable using online comparison tools.

A couple signs their mortgage documents in 1955. (Getty)

In cases where seniors opt for mortgage refinancing but don't shop around, they might pay more simply because the lender they're working with isn't putting their best rate — or lowest closing cost — forward. Ohanian gives the example of a large bank quoting a senior a 6.75% mortgage refinance rate at the cost of two discount points and one of his brokerage's wholesale lenders offering a 6.75% APR without points. In cases like this one, the Seniority Tax isn't necessarily a higher rate — it could be thousands of dollars of extra closing costs, perhaps in the form of these so-called mortgage points.

"That's just the bank is selling what they have to offer," Ohanian says. "And if people bank with them and they've had a good experience with them in the past, they're probably not inclined to go shop things around."

Does cognitive decline play a role in seniors' vulnerability to mortgage overpayment?

Even early cognitive decline can impair financial judgment, making older adults more susceptible to poor financial decisions, financial abuse, exploitation, and scams. According to a 2025 white paper from the Center for Law, Brain and Behavior, these losses can total an estimated $28.3 billion annually.

Older adults are the most vulnerable. They're often more socially isolated, or they may be alone, so they may not have the network to really double-check, like, 'What do you think?'

— Sharon Cornelissen, housing director at the Consumer Federation of America

Savvy lenders senior-proof an increasingly high-tech process

Fees, the loan officer who has worked for six lenders, says the many mortgage refinance lenders tailor their customer service experience to account for — or more cynically, leverage — an older mortgage applicant's discomfort with technology.

"It's over the phone," Fees says, "and they do a good job of making that person feel comfortable that they're making a good decision."

It can be harder for the homeowner, however, to determine whether their decision is a sound one if sales tactics are calibrated to troubleshoot your likeliest concerns.

How to push back on a costly or unnecessary offer to refinance

If you are being pressured to refinance, perhaps to "act before interest rates rise higher," consider it a red flag. While today's rates are unlikely to return to the record lows seen at the beginning of the decade, waiting a few days or even a couple of weeks to compare offers isn't a bad outcome — it gives you a better chance to consider your options and avoid overpayment.

"Especially in the case of a refi, don't feel pressured to act quickly," the CFA's Cornelissen says. "Because it's not like you're closing on a house — there's time to look around, ask around, get different loan estimates where it's laid out really clearly, both what the interest rate is, but then also what the closing costs are."

What do if your servicer is harassing you to refinance

If you are inundated with calls, emails or mailers about refinancing, there are steps you can take. Keep records (emails, voicemails, text messages, and letters) of persistent contact. The CFPB is the main federal agency that handles complaints about mortgage lenders and servicers. Lenders are required to offer you the ability to opt out of marketing or promotional communication. You can also opt out of prescreened mail offers for five years or permanently by visiting optoutprescreen.com or calling 1-888-5-OPT-OUT (1-888-567-8688). However, this only applies to offers based on lists from the three credit reporting bureaus (TransUnion, Equifax, and Experian).

Refinance only if it makes sense for your long-term financial needs and goals. Experts recommend you ask yourself these questions before proceeding:

How old will I be when the mortgage is paid off, and does this timeline fit with my retirement plan?
Do I want to leave my home to my children, or will I need its equity to help pay for future care?
Will the monthly savings outweigh the closing costs and additional interest I'll pay over time?
Would a home equity loan or other mortgage type be a better fit for my goals?

Don't rely solely on what the lender tells you. Get advice from someone who isn't involved in the transaction, like a trusted family member, elder law attorney, or certified financial planner.

"When people work on commission or have an incentive to encourage you to do something, it's often not in your best interest," says Lori Trawinski, an economist and a senior director at the AARP Public Policy Institute.

Refinancing can also be on the safer side when…

You're well qualified, in the early years of their original mortgage and plan to stay in the home long enough to make the extra closing and interest costs that come with refinancing worthwhile.

You also have one final opportunity to review a refinanced loan before it becomes official. Federal law requires the lender to give you a closing disclosure at least three business days before the closing. Take time to compare the document with the loan estimate you received earlier in the process. Highlight any changes in fees, interest rates, or monthly payments, and ask your lender — and ideally the expert outside the transaction — to explain anything you don't understand before signing.

"Even the people that would take advantage of an elderly person, this is a law," says Parker. "They cannot, even if they're dishonest, put fake numbers on [the disclosure]."

What does good service from a loan professional look like?

Fees, the loan officer who's worked for a half-dozen lenders in her career, says she uses a simple test when determining whether to suggest a mortgage refinance to seniors (but also borrowers of any age): "Would you tell your mom to do it?" Fees adds that she views her job as laying out all of your options so that you have the information you need to make a good decision. "If [refinancing] is not that beneficial," she says, "the [client's] going to know, we're going to talk about it."

What if you've already refi'd?

If you've already closed on your refinance and are having second thoughts, you may still have options.

If you refinanced within the past 72 hours…

As part of your refinance, you should have received a notice explaining your right to rescind, or cancel, the transaction. The right of rescission is a part of a federal law that allows homeowners to back out of certain refinancing contracts within three days of signing without losing money. You have until midnight on the third business day after signing the agreement to cancel in a written letter or form provided by the lender. Either way, keep a copy of any evidence that it was delivered on time.

If you missed the three-day rescission period…

You might consider refinancing again. There generally isn't a limit to the number of times you can refinance, though lenders typically require a waiting period between transactions. Consider, however, that refinancing might not make financial sense, particularly because you'll pay closing costs again.

If you were misled or subjected to deceptive lending practices…

Consider filing a complaint with your state attorney general or the CFPB. Although the CFPB's priorities have shifted under the Trump administration, it continues to accept consumer complaints and has the authority to investigate lenders and, when appropriate, take enforcement action. "Over the 16 years that I've been doing this, I've seen [brokers] really get flagged and fined or actually removed from the business," says Parker. "It does happen."

Methodology

To determine how many mortgage borrowers overpaid for their loans, Bankrate analyzed 3.2 million HMDA mortgage loan originations from 2025 and compared them against competitive offers available on Bankrate's mortgage marketplace. The dataset includes both home purchases and refinances.

From this dataset, Bankrate analyzed refinance applicants across four age groups (under 35, 35-44, 45-54 and 55+) to identify who is most affected by mortgage overpayments.

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 five metrics:

Overpayment rates (%): 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 8-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 8-year expected overpayment by eight. 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.
Average rate spread (%): The average gap between borrowers' actual mortgage rate and the most competitive Bankrate benchmark.

For more detailed information on the methodology and the analysis, see Bankrate's research on the Hidden Homeownership Tax. — Bankrate data reporter & analyst Alex Gailey

Additional editing contributed by Alice Holbrook