Mortgage Payoff Calculator

Even a modest extra payment makes a dramatic difference because every dollar of additional principal cuts interest for the entire remaining life of the loan. On a typical $300,000 loan at 6.5%, throwing in an extra $200 a month can shave roughly 5 to 7 years off the schedule and save somewhere between $80,000 and $100,000 in total interest. The earlier in the loan you start, the bigger the impact, since early payments are mostly interest. Use the calculator above to see your exact numbers — small adjustments to the extra-payment field translate directly into years of freedom and tens of thousands of dollars.

Both work, but they save differently. A monthly extra payment is automatic, builds discipline, and compounds month after month, which usually wins long-term. A one-time lump sum applied early in the loan has an outsized effect because it kills interest on that principal for decades. The honest answer is: do whichever you'll actually stick with. If you're getting an annual bonus or a tax refund, a lump sum is a great way to put windfalls to work. If you have steady income with a little slack, monthly extras are the most efficient. Combining both is the strongest play of all.

It depends on your mortgage rate versus realistic after-tax investment returns, plus your appetite for risk. Historically the S&P 500 returns about 7% to 10% annually, so if your rate is in the 3% to 4% range, investing typically wins on paper. With rates in the 6% to 7% range, paying down the mortgage is closer to a guaranteed risk-free return that's hard to beat. Don't ignore the psychological side either — being mortgage-free is a real, tangible kind of wealth. Many people split the difference, contributing to retirement accounts while also accelerating the loan. For a deeper take, read our piece on using a 401(k) to pay off your house.

The vast majority of conventional, FHA, VA, and USDA loans originated today have no prepayment penalty, so you can pay extra or pay off the entire balance whenever you want without fees. However, some older loans, certain non-QM products, and a few investor loans do include prepayment penalties — usually for the first 1 to 5 years. Check your closing documents or call your servicer and ask directly. Also, when you make an extra payment, label it clearly as 'apply to principal' — otherwise some servicers may credit it toward your next month's payment instead of reducing principal. Make sure other obligations don't interfere; see our note on paying off debts during underwriting.

Refinancing lowers the rate on your entire balance immediately, which can be powerful if rates have dropped meaningfully since you closed. Paying extra doesn't change your rate but eliminates the principal that interest is charged on. The two strategies actually pair well: refinance to a lower rate when it makes sense, then keep paying close to your old payment amount — the difference becomes automatic extra principal. If rates haven't moved much, the math usually favors just paying extra, since refinancing comes with closing costs that take years to break even on. See our break-even point calculator and refinance options.