Should You Pay Off Your Mortgage Early?
🇩🇪 Diesen Artikel auf Deutsch lesenPaying extra on your mortgage gives you a guaranteed return equal to your mortgage rate. It makes the most sense once you have an emergency fund, no high-interest debt and you are getting your employer's retirement match. If your mortgage rate is low, investing the extra money has historically often produced more wealth, but with risk.
Few feelings beat owning your home outright. But money sent to your mortgage can't be used for anything else, so it's worth comparing with the alternatives.
What extra payments achieve
Every extra dollar goes straight to principal, which lowers the interest charged in all future months. Even one extra payment a year can shorten a 30-year loan by several years.
Loan Payment CalculatorMonthly payment and total interestTry the calculator →Pay off early if…
- Your mortgage rate is relatively high compared with safe savings rates.
- You want lower fixed costs before retirement.
- Being debt-free matters more to you than maximizing returns.
- You have already built an emergency fund and capture your 401(k) match.
Invest instead if…
- Your mortgage rate is low, for example below what safe Treasury bills pay.
- You are not yet maxing out tax-advantaged retirement accounts.
- You have little cash outside your home — home equity is hard to access in an emergency.
The order of priorities
- Emergency fund of 3–6 months of expenses
- Employer retirement match
- Pay off high-interest debt (credit cards, personal loans)
- Then choose between extra mortgage payments and more investing — or split the difference
Frequently asked questions
Do I lose my mortgage interest deduction?
Only if you itemize deductions. Since the standard deduction is high, many homeowners no longer benefit from the mortgage interest deduction.
Should I recast instead?
A recast lowers your monthly payment after a large lump sum without refinancing. Ask your servicer whether it's offered and what it costs.