If you're wondering how to pay off your house faster, making additional payments toward your mortgage principal is one of the simplest strategies. Paying extra can reduce your loan balance, lower the amount of interest you pay over time and help you become mortgage-free sooner.

How to Pay Off a Mortgage Faster

Here are six practical strategies that can help you pay off your mortgage early.

1. Make Extra Mortgage Payments
One of the simplest ways to pay off a mortgage faster is to pay more than your required monthly payment.

For example, if your principal-and-interest payment is $1,800, you could round up your payment and pay $2,000 each month. If the additional $200 is applied to your principal, you'll reduce your mortgage balance faster.

Because mortgage interest is generally calculated based on the outstanding loan balance, reducing your principal can also reduce the interest you'll pay over time. 

Tip: Check with your mortgage servicer to make sure additional payments are applied to principal.

2. Make One Extra Mortgage Payment Each Year
Making one additional mortgage payment each year can help shorten your loan term.

You can accomplish this in several ways:

• Make an extra payment at the end of the year.
• Divide your monthly principal-and-interest payment by 12 and add that amount to each monthly payment.
• Save throughout the year and make one lump sum payment.

For example, if your principal-and-interest payment is $2,000 per month, adding about $167 to each payment would result in approximately one additional $2,000 payment over a year.

The earlier you make additional principal payments, the longer that lower balance has to reduce future interest costs. 

3. Consider Biweekly Mortgage Payments
With a biweekly mortgage payment schedule, you pay half of your monthly payment every two weeks.

Because there are 52 weeks in a year, you'll make 26 half-payments. That's equivalent to 13 full monthly payments instead of 12.

That additional annual payment can help you pay off your mortgage early.

Tip: Be sure to check whether your mortgage servicer offers the option and whether there are fees associated with it. You may be able to accomplish a similar result by making an additional principal payment yourself.

4. Put Windfalls Toward Your Mortgage
A bonus, tax refund, inheritance, or other unexpected money can provide an opportunity to make a large mortgage principal payment.

You don't necessarily have to put the entire amount toward your mortgage. Even using a portion of a windfall can reduce your loan balance and future interest costs.

Before making a large lump-sum payment, consider whether you have adequate emergency savings and whether you have higher-interest debt or other financial priorities.

5. Increase Your Payment When Your Income Goes Up
A raise or promotion can be an opportunity to accelerate your mortgage payoff without dramatically changing your lifestyle.

For example, if your income increases by $500 per month, you could put $250 toward your mortgage and use the remaining $250 for savings, investments, or other expenses.

You can also redirect money toward your mortgage after paying off another debt.

If you finish making a $400 monthly car payment, for example, you could add some or all of that $400 to your mortgage payment.

6. Refinance to a Shorter Mortgage Term
If you have a 30-year mortgage, refinancing into a 15-year mortgage can help you pay off your house much sooner. A shorter loan term generally means a higher monthly payment, but you may pay less interest over the life of the loan.

However, refinancing comes with costs and may not make sense for every homeowner. Before refinancing, compare:

• Your current interest rate with the new rate
• Your current monthly payment with the new payment
• Closing costs and other refinancing fees
• Your remaining loan balance
• Your remaining loan term
• The total interest you would pay under each option
• How long you expect to stay in the home

Consider how long it would take to recover the cost of refinancing through your potential monthly savings. If you plan to move before reaching that break-even point, refinancing may not provide enough benefit to justify the upfront costs.

You may also be able to achieve a similar payoff timeline by keeping your existing mortgage and making additional principal payments. This can give you more flexibility because you aren't committing to a higher required monthly payment.

Mortgage Payoff Mistakes to Avoid

Paying off your house faster can be rewarding but avoid these common mistakes.

• Draining Your Emergency Fund
  Don't put every available dollar into your home if doing so leaves you without adequate cash in savings. A paid-off mortgage doesn't help much if you have no money available for an unexpected expense.
• Ignoring High-Interest Debt
  Credit card and other high-interest debt may deserve priority over additional mortgage payments.
• Skipping Retirement Contributions
  If your employer offers a retirement plan match, consider contributing enough to take full advantage of it before aggressively paying down your mortgage.
• Assuming Extra Payments Automatically Reduce Principal
  When making extra mortgage payments, confirm with your servicer how the additional money will be applied. Make sure the extra payment is applied to your principal balance rather than simply advancing your next payment due date.
• Forgetting to Check Your Loan Terms
  Some mortgages have prepayment penalties, although not all do. Your loan documents should disclose whether a penalty applies and under what circumstances.

Should I Pay Off My Mortgage Early or Invest?

Once you've decided you have extra money available, you may still need to decide whether to put it toward your mortgage or invest it. Paying down your mortgage can provide a predictable benefit by reducing future interest, while investing offers the potential for long-term growth but involves market risk.

When comparing the two options, consider:

• Your mortgage interest rate
• Your investment time horizon and risk tolerance
• Your tax situation
• Your need for flexibility and access to your money
• Your other short- and long-term financial goals

You don't necessarily have to choose one or the other. Some homeowners put extra money toward their mortgage while continuing to invest.

Ready to Pay Off Your Mortgage Faster?

Connect with an FNBO mortgage loan officer to discuss your mortgage payoff goals, explore strategies for paying down your loan faster, and understand how different options may fit your budget and financial goals.

About the Author
With 26 years of banking experience in Western Nebraska, Daylin Libsack is passionate about helping borrowers achieve their dreams of homeownership. She takes pride in making the homebuying journey relaxed and comfortable, as well as giving back through volunteer work in the communities where she lives and works.