4 Hacks To Pay Off Your Mortgage Early

Key Takeaways

Two-thirds of homeowners in the U.S. have a mortgage payment. That means that one-third of homeowners became debt-free by paying off their mortgage early. How did they do that, and how can you join their ranks? Keep reading, and we’ll give you the best tips on how to pay off your mortgage early so that you’ll no longer have that debt hanging over your head.

Can You Pay Off A Mortgage Early?

It is absolutely possible to pay off your mortgage early. However, there are some ground rules you’ll want to know first.

Before you get started, contact your mortgage lender. Some companies charge prepayment penalties, while others might only accept extra mortgage payments at certain times. Knowing this information in advance will help you come up with a better gameplan. If you’re reading this guide before purchasing a home, these are some things to consider when picking a mortgage company.

If you are allowed to make extra payments, make sure that those payments will get applied to your principal. Sometimes, you’ll send in an extra payment and find out that it was applied to next month’s payment. It’s always good to double-check.

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Pros Of Paying Off A Mortgage Early

Before you begin paying off your mortgage early, you’ll want to consider the pros and cons. Paying off your mortgage early will:

  • Free up your cash flow because you’ll no longer have a monthly mortgage payment.

  • Save you thousands of dollars on interest.

  • Help you get a predictable rate of return on your purchase, which is equal to the interest rate on your payoff balance.

  • Take a weight off your shoulders, knowing you own your house free and clear.

  • Allow you to access a larger amount of equity in your home sooner.

Cons Of Paying Off Your Mortgage Early

The advantages of paying off your mortgage early sound great. However, doing so can have its downsides as well. Here are some things to consider before deciding to pay off your mortgage early:

  • You’ll tie up your liquidity into your home, which will make it harder to access if needed.

  • You won’t be eligible for mortgage interest tax deduction.

  • There is an opportunity cost of other types of assets or securities you could have invested in otherwise.

  • If the market suddenly drops and you have to do a quick-sell, you might not get back as much value as you had hoped.

4 Hacks To Pay Off Your Mortgage Early

So far, we’ve discussed the possible advantages and disadvantages of paying off your mortgage early. There is no right or wrong answer, which largely depends on the market you live in, your financial goals, and your personal circumstances. If you do decide to try and pay off your mortgage early, here are the best 4 hacks you’ll want to keep in mind:

  1. Make Extra Payments

  2. Cut Extra Spending

  3. Refinance Your Loan

  4. Downsize Your Home

1. Make Extra Payments

The most straightforward step to take is making extra payments. Again, you’ll want to verify through your mortgage company that you can do this without incurring penalties.

One tried and true method is the biweekly mortgage payment schedule. Instead of making one full payment per month, you’re making two half-payments every two weeks. This might not make any sense at first, but if you look at a calendar, you’ll realize that you’ll end up making one extra payment per year. If you can do this, you can reduce a 30-year mortgage by 8 whole years. How quickly you can pay off your mortgage using the biweekly payment schedule depends on your mortgage terms and interest rate.

If you can swing it, you can magnify this plan by making an extra payment every 3 months. Those who make that additional quarterly payment knocks 11 years off of their repayment timeline. You’ll also save tens of thousands of dollars in interest payments.

2. Cut Extra Spending

Next, you have to commit to cutting your extra spending. To afford making those extra payments, you’ll likely need to restructure your budget. In other words — time to trim the fat! Take a good hard look at how your money flows out every month. What expenses aren’t necessary? What kind of swaps can you make to save money? Common examples include bringing your lunch to work or forgoing those coffee runs. Small adjustments can go a long way!

3. Refinance Your Loan

Many homeowners opt for a 30-year mortgage because it lowers their monthly mortgage payments. However, who wants to be in debt for 30 long years?

Luckily, you have the option of refinancing your loan. You can take your longer-term mortgage and refinance it into a 15-year loan. If refinancing isn’t an option, don’t worry. Commit to paying down your mortgage as if you were on a 15-year or shorter loan.

4. Downsize Your Home

If your desire to get rid of your mortgage payments is stronger than your desire to keep your current home, consider a downsize. This is a drastic but potentially effective strategy. If you sell your big house and move into a smaller, less expensive home, you’ll likely make a profit. You can use that cash toward paying off your new mortgage much faster.

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Tips For Paying Early

Now that you’ve got the 4 major hacks for paying off your mortgage early under your belt, it’s time to explore some additional tips. When you’re making as large a financial decision as this, you’ll want to be equipped with all the strategies you can. Here are some extra tips and mistakes to avoid when paying off a mortgage early:

  • Get rid of any high-interest debt first, such as credit card debt. This way, you’ll be able to free up cash flow to tackle your mortgage.

  • No matter what you do, make sure you’re putting money away towards retirement. Always pay yourself first, and you’ll be glad you did when you retire with a cushy nest egg and no mortgage..

  • Build up an emergency fund so that you won’t have to dip into your mortgage repayment budget if any unexpected events were to occur.

  • Don’t make the mistake of ignoring other options for your money. Yes, paying off your mortgage is a great priority. However, there could be alternative ways to build your wealth. For example, if you come into some extra money, investing it in stocks could provide you with a better relative value than making an extra payment on your mortgage.

  • Avoid the mistake of extra payments going towards your interest. In some cases, your lender will try to apply your extra payments toward the interest and not your principal. Make sure to keep a close eye on your payments as they get processed, and verify that they go towards your principal balance.

  • Don’t end up becoming cash-poor because you’re so dedicated to paying off your mortgage. Your plan could back-fire if something unexpected comes up and you don’t have enough cash. Build up an emergency fund so that you can avoid using credit cards or taking out loans in case expenses come up.

Can You Pay Off Mortgage With A Credit Card?

A burning question that comes up often is, “can you pay off a mortgage with a credit card?” This is a compelling tactic. So many credit cards offer amazing rewards, but with the catch that you have to build up a high balance to get those rewards. You might think to yourself, “why not pay off my mortgage with this new credit card and get the rewards?”

The truth is, you might have trouble doing this, but you can find a way. Most mortgage lenders won’t accept a credit card payment, which is called a debt-for-debt payment. You’ll want to look into your credit card company’s terms, the terms of the company’s network (such as Visa or American Express), and the terms of your mortgage lender.

Usually, you’ll find that there are roadblocks in at least one, if not all, of these terms. However, you can sometimes find a third-party service that’ll provide a workaround for a fee. This brings us to the question of whether or not it’s the right move.

Before Paying With A Credit Card

Before you pay off your mortgage with a credit card, you’ll want to weigh in a few factors. First, check in with your motivations. Are you trying to pay off your mortgage, or are you trying to go after those credit card rewards points? Keep in mind that you’ll rack up a huge credit card balance. This leads to more interest fees, a lower credit score, and more financial stress in general. If you go through a third party to make a credit card mortgage payment possible, the high service fee might not make the card rewards worthwhile.


There are plenty of benefits to paying off your mortgage early. However, just like most get-rich-quick schemes are too good to be true, watch out for strategies or services that offer to help you pay off your mortgage quickly. The most tried-and-true methods require dedication, hard work, and staying committed to your financial priorities. If you’re lucky, you’re reading this before you even take out a mortgage. Consider these hacks before taking out a home loan and get yourself in a better financial position from the get-go.

Do you have any tricks to paying off a mortgage early? Care to share? Leave your ideas in the comments below!

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