How to Pay Off Your Mortgage Faster
You don't need a windfall to pay off your mortgage early. Small, consistent extra payments can shave years off your loan and save tens of thousands.
Strategy 1: Biweekly Payments
Instead of 12 monthly payments, make half-payments every two weeks. Because there are 52 weeks in a year, you end up making 26 half-payments — equivalent to 13 full payments. That extra payment per year adds up significantly over time.
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Strategy 2: Round Up Your Payment
If your payment is $2,594, round it up to $2,700 or $3,000. The extra goes directly to principal. This is one of the easiest strategies — it doesn't require changing your payment schedule, and the impact compounds over time.
Example Scenario
Let's say you have a $500,000 home in Phoenix with a remaining balance of $320,000.
If you refinance and your closing costs come in around $10,000, but you reduce your monthly payment by $350, your break-even point would be around 28–30 months.
If you plan to stay in the home longer than that, the move may make sense. If not, it may not.
This is where strategy matters — not just rates.
Strategy 3: Annual Lump-Sum Payments
Apply a tax refund, bonus, or inheritance directly to your mortgage principal once a year. A single $5,000 annual payment on a $400K mortgage saves ~$35,000 in interest and cuts 3 years off the loan.
Important: Always specify that the extra payment should be applied to principal, not future payments. Contact your servicer to confirm.
Strategy 4: Refinance to a Shorter Term
Refinancing from a 30-year to a 15-year mortgage significantly increases your monthly payment but slashes total interest paid — often by more than $100,000 on a typical loan. This strategy works best when rates are favorable and you have stable, strong income.
Strategy 5: Mortgage Recasting
If you receive a large windfall, a recast lets you apply it to principal, then your lender re-amortizes the loan at the lower balance. Your rate and term stay the same, but your monthly payment drops. Unlike refinancing, recasting costs only $200–$500 with no credit check.
See how much extra payments save you
Use our mortgage calculator to model different payoff strategies.
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