Should You Pay Extra on Your Mortgage Each Month?

What $200 Extra Per Month Actually Does to a 30-Year Loan

Take a $380,000 mortgage at 6.75%, a rate that still reflects where many buyers landed over the past couple of years. The standard principal-and-interest payment is roughly $2,466 per month. Over 30 years, you'd pay about $507,000 in interest alone, nearly doubling the original loan amount.

Add $200 to every payment and the picture changes fast. You'd pay off the loan about 4.5 years early and cut total interest by around $68,000. That's not a rounding error. It's the equivalent of a new car or a couple of years of college tuition, and you'd get it simply by redirecting money you might otherwise put toward a streaming service bundle or a gym membership you rarely use.

Why the First Few Years Are the Best Time to Start

Mortgage interest is front-loaded. In month one of that $380,000 loan, roughly $2,138 of your $2,466 payment goes to interest and only $328 chips away at the balance. Extra payments made early hit that principal directly, which means every subsequent month's interest calculation starts from a smaller base. Try the home loan payment calculator to see your own numbers.

Waiting five years to start paying extra isn't catastrophic, but you give up some compounding benefit. Starting in year six instead of year one on the same loan saves about $51,000 in interest rather than $68,000. The difference is $17,000, just from a five-year delay. There's no perfect time, but sooner consistently wins.

One practical check: confirm your loan has no prepayment penalty. Most conventional and FHA loans issued after 2014 are legally prohibited from charging one, but some portfolio loans and older mortgages still carry that clause. Read your note or call your servicer before making a big lump sum payment.

Extra Payments vs. Refinancing: How to Compare Them Honestly

With 30-year fixed rates still hovering above 6.5% for most borrowers, refinancing into a meaningfully lower rate is not available to everyone right now. If you bought or refinanced at 7% or higher, you might be tempted to wait for rates to drop before making any moves. Extra payments offer a different path: they reduce your effective interest cost without closing costs, without a credit inquiry, and without resetting your loan term.

Refinancing makes sense when the rate drop is large enough to recoup closing costs within a reasonable timeline, typically two to four years. Extra payments make sense when you have modest cash flow to spare and want guaranteed, risk-free return equal to your interest rate. On a 6.75% mortgage, every extra dollar you pay down earns you a guaranteed 6.75% annual return. Few savings accounts or short-term bonds are matching that right now.

The two strategies aren't mutually exclusive. Some homeowners plan to make extra payments now and refinance if rates fall another full percentage point. Running both scenarios side by side with a home loan payment calculator helps you see exactly which path saves more over your specific remaining term.

Biweekly Payments: The Sneaky Way to Make One Extra Payment a Year

Instead of paying $2,466 once a month, you pay $1,233 every two weeks. Because there are 52 weeks in a year, you end up making 26 half-payments, which equals 13 full monthly payments instead of 12. That one extra payment per year, applied to principal, quietly shortens a 30-year mortgage by about three to four years.

The catch is that some servicers don't automatically apply biweekly payments to principal. They may hold the first half-payment until the second arrives, then apply the full amount at month-end, which completely defeats the purpose. Call your servicer and ask explicitly how they handle biweekly payments before switching. If they don't accommodate it properly, simply make one extra full payment in January each year and earmark it as principal-only.