Become Mortgage-Free Years Sooner

Extra payments go directly toward your principal balance, reducing the amount of interest charged over the life of the loan. Since interest is calculated on your remaining balance, a lower balance means less interest accrues each month. Even small extra payments of $100-200 per month can save tens of thousands of dollars and shorten your loan by several years.

It depends on your mortgage interest rate, expected investment returns, and personal risk tolerance. If your mortgage rate is 7% and you expect 8% returns from investments, the math slightly favors investing. However, paying off your mortgage provides a guaranteed "return" equal to your interest rate with zero risk. Many people value the peace of mind and financial freedom of being debt-free, regardless of the pure mathematics.

With bi-weekly payments, you pay half your monthly payment every two weeks. Since there are 52 weeks in a year, you make 26 half-payments, which equals 13 full monthly payments instead of 12. That extra payment each year goes entirely toward principal, typically shaving 4-6 years off a 30-year mortgage and saving tens of thousands in interest.

Combine multiple strategies for maximum impact: Start with a lump sum payment (from savings, bonus, or tax refund) to immediately reduce your principal. Then switch to bi-weekly payments for an automatic extra payment each year. Finally, add whatever extra you can afford to each payment. Use this calculator to see how combining these strategies can dramatically accelerate your payoff timeline.

Most modern mortgages do not have prepayment penalties, but it's important to check your loan documents. Prepayment penalties were more common before 2014 but are now restricted by federal regulations for most residential mortgages. If your loan does have a penalty, it typically only applies during the first few years and may still be worth paying if your interest savings are greater.