Quick answer
There are three main ways. You can make an extra payment or two a year, put a lump sum like your tax refund toward your balance, or refinance to a lower rate or shorter term if the market allows. Extra payments don’t usually have closing costs, but a refinance does. Before you start, tell your servicer to apply extra money to principal, and check for any prepayment penalty.
Rules on this page were checked on against CFPB guidance and Valor Mortgage’s refinance guides. Program terms are subject to agency and lender guidelines and may change, and individual lenders can set stricter rules.
Three ways to pay your mortgage off sooner
Transcript: How can you pay your mortgage off faster? There's a couple things you could do. One is you can refinance to try and get a cheaper interest rate if the market permits. Two, you can do an extra payment or a couple extra payments a year, and that will substantially reduce the amount of debt that you'll be paying over time. The third one is your tax return. It's an opportune time to be able to take a large chunk of money and put it towards a financial investment like your house. If you have any other questions, feel free to give us a call. That way, when you do buy or refinance, you do so with confidence and you do it with valor.
A refinance has closing costs, so compare them with the possible savings. The effect of extra payments depends on your loan.
How do the options compare?
| Option | How it works | Trade-off |
|---|---|---|
| Extra payments | Each extra dollar lowers the principal, which means less interest later | Your required payment usually doesn’t change |
| Lump sum | Puts a refund or a bonus toward principal | That money is no longer available for savings or other debts |
| Biweekly schedule | Half a payment every two weeks can add up to one extra payment a year | Check your servicer’s rules and any fees for third-party plans |
| Shorter-term refinance | A new loan with a shorter term, and possibly a lower rate | Closing costs, and a higher required payment |
| Recast | After a large principal payment, some servicers reset your payment | It lowers the required payment, but not the term. Not every loan allows it |
General information. Results depend on your loan. Ask your servicer how it handles extra payments.
How do you make sure extra money goes to principal?
- Check your loan documents for a prepayment penalty. The CFPB says these don’t normally apply to small extra principal payments, but it’s worth confirming.
- Ask your servicer how to mark a payment as “principal only.”
- Check your next statement to confirm the balance went down by that amount.
Be careful with paid biweekly programs. You can often get a similar result by adding one-twelfth of a payment each time you pay.
When does a refinance make sense for this?
It might when rates have fallen, or when a shorter term fits your budget. Compare it against simply paying extra, since extra payments have no closing costs and leave you free to stop if money gets tight. See whether you need a 1% rate drop and how a rate and term refinance works.
Should paying it off be your first goal?
Not always. Before you send extra money, consider:
- Emergency savings. Money in your home is harder to get back in a hurry.
- Higher-interest debt. Credit card interest may cost you more than your mortgage.
- Retirement or other goals. A tax or financial professional can help you weigh these.
This is general information, not financial or tax advice.
Paying off your mortgage FAQ
What does one extra payment a year do?
It lowers your balance sooner, so less interest builds up, and your loan can end earlier. The effect depends on your rate, your balance and how early in the loan you start.
Is there a penalty for paying off a mortgage early?
Not all mortgages have one. If yours does, you would have agreed to it at closing. It typically applies to paying off the entire balance within a set number of years, usually three or five.
Will extra payments lower my required payment?
Usually not. They shorten the loan, but your required payment stays the same unless you recast or refinance. Ask your servicer.
Where these rules come from
| Rule or figure | Source | As of |
|---|---|---|
| Prepayment penalties | CFPB, prepayment penalties | Nov 5, 2026 |
| Refinance costs | Freddie Mac, costs of refinancing | Nov 5, 2026 |
| Refinancing options | Valor Mortgage refinance guide | Valor Mortgage guide |
Related answers and guides
- Do you need a 1% rate drop to refinance?
- Can you use a tax refund to buy a house?
- What is PMI, and when does it go away?
- More answers on refinancing and paying off your mortgage.
- About Christopher Armantrout.
Call me at (615) 671-9178. That’s the fastest way to get a straight answer on what you’d qualify for and whether a refinance would help you pay off sooner.
If it’s after hours, grab a time on my calendar. Pick a slot that works and I’ll call you then.
If your life is too chaotic for a phone call right now — I understand — start an application and I’ll review it and reach out with a plan.
Valor Mortgage, LLC · Christopher Armantrout, Mortgage Loan Originator, NMLS #1210804 · Valor Mortgage, LLC is powered by Encore Lending Group, LLC, NMLS #1249911 · Licensed in Tennessee · Equal Housing Opportunity
724 S Main St, Springfield, TN 37172 · (615) 671-9178 · christopher@valor.mortgage · NMLS Consumer Access
The dollar figures on this page are illustrative examples for general information only and are not an offer, a rate quote, or a commitment to lend. Actual interest rates and APRs vary based on loan program, borrower qualifications, property, market conditions and other factors. Program fees, limits and terms are set by the agencies named above and change without notice; all loans are subject to credit approval, income verification and property appraisal. Not all applicants will qualify.