Should I Pay Extra on My Mortgage?

Benefits of paying extra

Putting extra money toward principal can improve your long-term financial position by:

• reducing total lifetime interest
• helping you pay off the loan sooner
• lowering the overall cost of borrowing
• building home equity faster
• giving you peace of mind by reducing debt sooner

When extra payments may not be the best move

Paying extra is often less attractive if you still need to strengthen your financial foundation first.

• you do not yet have a solid emergency fund
• you still carry high-interest debt such as credit cards
• you may need cash soon for moving, repairs, or job changes
• you expect to sell, refinance, or relocate in the near future
• other financial priorities need attention first

How small extra payments add up

You do not need a huge lump sum to make progress. Even modest extra payments, such as adding $100 or $200 each month, can shorten your loan by years and reduce total interest by thousands of dollars over time.

When paying extra makes the biggest difference

Extra mortgage payments usually have the greatest impact early in the loan, when a larger share of each monthly payment is still going toward interest. The earlier you start, the more time those extra principal reductions have to compound into interest savings.

• during the first years of the mortgage
• when your interest rate is relatively high
• when you expect to stay in the home for a long time
• when extra payments still leave room in your monthly budget

If you want to see whether small recurring payments will actually make a meaningful difference, use the extra mortgage payment calculator to model your own loan scenario.

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