Why early dollars punch so hard
In the first years of a mortgage, most of each payment is interest — on a fresh 30-year loan at 6.5%, roughly three-quarters of month one’s payment vanishes into interest. An extra dollar sent today skips that queue entirely: it retires principal that would otherwise have generated interest every month for decades. That’s why the same total money saves dramatically more when it arrives early, and why lump sums beat the identical amount dripped in later.
Three flavors of acceleration, all modeled here or one click away: extra monthly (this page), biweekly half-payments (the automatic version — one extra payment a year), and a recast if what you actually want is a lower payment rather than a faster finish.
Checklist before you accelerate
- No prepayment penalty — rare on post-2014 U.S. loans, but confirm.
- Higher-rate debt first — a credit card at 24% outranks a mortgage at 6.5% every time; run the payoff comparison.
- Emergency fund intact — money sent to the mortgage is illiquid; you can’t un-pay it in a crisis.
- “Apply to principal” — say it explicitly to your servicer, verify on the next statement.
Frequently asked questions
How much do extra mortgage payments actually save?
Every extra dollar goes straight to principal, which stops accruing interest for the entire remaining life of the loan. On a typical balance at 6–7%, an extra $200–$300 a month commonly removes 5–8 years and tens of thousands of dollars in interest. The earlier in the loan, the bigger the effect — early payments are almost all interest.
Is it better to pay extra monthly or make one lump sum?
Dollar for dollar, sooner beats later: a lump sum today saves more than the same total spread over years. In practice the best plan is whatever you’ll actually sustain — this calculator accepts both at once, so you can model a tax-refund lump sum plus a modest monthly extra.
Should I pay off my mortgage early or invest?
Prepaying earns you the loan’s interest rate, guaranteed and tax-free. Investing offers a higher expected return (~7% real, long run) but with risk. Below ~4% mortgage rate, math favors investing; above ~6.5%, the guaranteed saving is very competitive; between the two it’s a risk-preference call. Capture any 401(k) match before doing either.
Will my monthly payment go down if I pay extra?
No — extra principal payments shorten the loan but leave the required payment unchanged. If a lower payment is what you want, that’s a recast: a lump sum plus a servicer re-amortization. Our mortgage recast calculator covers that path.
Do I need to tell my servicer anything?
Yes: mark extra amounts as “apply to principal.” Otherwise many servicers treat them as an early payment of next month’s bill, which saves you nothing. Check your next statement to confirm the balance dropped by the extra amount.