Ways to Pay Off Your Mortgage Faster

Paying off your mortgage faster can save you tens of thousands in interest. Here are the most effective strategies.

1. Make Biweekly Payments

Instead of 12 monthly payments, make 26 half-payments. This results in one extra full payment per year.

Savings on a $300,000, 30-year, 6.5% mortgage:

• •Pay off 4-5 years early
• •Save ~$60,000 in interest

2. Round Up Your Payments

Round your payment up to the nearest $100. If your payment is $1,847, pay $1,900.

3. Make One Extra Payment Per Year

Use your tax refund, bonus, or savings to make one additional payment annually.

4. Refinance to a Shorter Term

Switching from a 30-year to a 15-year mortgage increases monthly payments but dramatically reduces total interest.

5. Apply Windfalls to Principal

Direct raises, bonuses, inheritances, and other windfalls toward your mortgage principal.

6. Recast Your Mortgage

After making a large lump-sum payment, ask your lender to recast (re-amortize) your loan, which lowers your monthly payment while keeping the same term.

Important Considerations

• •Check for prepayment penalties
• •Make sure extra payments go toward principal
• •Consider opportunity cost (investing vs. paying off mortgage)
• •Maintain an emergency fund first

The Math

On a $400,000 mortgage at 6.5% over 30 years:

• •Regular payments: $910,178 total ($510,178 in interest)
• •$200 extra/month: Pay off in 24 years, save $119,000
• •$500 extra/month: Pay off in 19 years, save $213,000