Mortgage Payoff Calculator
What extra payments save you
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If so, a refinance may save more interest than extra payments, or work alongside them. Compare quotes to find out.
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How extra payments pay off a mortgage early
Every regular mortgage payment covers that month's interest first, and the rest pays down the balance. Extra money you send goes straight to the balance. A smaller balance means less interest next month, so more of every later payment goes to principal. That's why a modest extra payment can take years off a loan.
With the example numbers, a $250,000 balance at 6.5% with 25 years left has a required payment of about $1,688. Adding $200 a month pays it off in 234 months instead of 300, 5 years and 6 months sooner, and saves about $64,900 in interest.
Before you pay extra
- Tell your lender extra money is for principal. Some apply it to next month's payment unless you say otherwise.
- Check for a prepayment penalty. Most home loans don't have one, but some do.
- Keep an emergency fund first. Money paid into a house is hard to get back out.
- Compare with other uses of the money, such as paying off higher-rate debt or retirement contributions.
Extra payments vs. refinancing
Extra payments save interest at your current rate. If today's rates are meaningfully lower than yours, a refinance can save more, and you can still pay extra on the new loan. Use the refinance calculator to compare.
Frequently asked questions
How can I pay off my mortgage faster?
Pay extra toward principal each month, switch to biweekly payments, put windfalls like bonuses or tax refunds toward the balance, or refinance to a shorter term. Even $100–$200 a month can take years off a 30-year loan.
Should I pay off my mortgage early?
It depends on your rate and your other options. Paying extra earns a guaranteed return equal to your mortgage rate. Before you do, most people should have an emergency fund, capture any employer retirement match and pay off higher-rate debt first.
How do I pay off my mortgage in 5 years?
Set the extra payment so the loan ends in 60 payments. For a $250,000 balance at 6.5%, that means paying about $4,892 a month in principal and interest instead of the required $1,688, or roughly $3,204 extra. Enter your own balance and rate above and adjust the extra amount until the time saved matches your goal.
What happens when you pay off your mortgage?
Your lender sends a release of lien (or similar document) and records it with the county, showing you own the home free and clear. If you had escrow, the account closes and any balance is refunded, and from then on you pay property tax and insurance yourself.
Is there a penalty for paying off a mortgage early?
Most home loans today have no prepayment penalty, and federal rules limit them on most mortgages. Check your promissory note or closing disclosure to be sure.
Do extra payments lower my monthly payment?
No. Extra principal shortens the loan but the required payment stays the same. If you want a lower payment after a large lump sum, ask your lender about a recast.