Should You Pay Off Your Mortgage Early? Who Should (and Shouldn’t) Make Extra Mortgage Payments

Paying off your mortgage early feels like the responsible thing to do. No debt, no payment, no bank. For a lot of people, it’s the financial finish line.

But a September 4, 2026 Washington Post column by Julie Z. Weil carried a headline that stopped a lot of homeowners mid-scroll: “The wrong people are paying off their mortgages.” Its subhead was even more direct: people with low interest rates should be holding on to their mortgages, yet they’re accelerating their payments anyway.

The column draws on new data from Rocket Mortgage covering nearly 3 million loans in all 50 states over five years. The headline finding is that almost 1 in 4 homeowners pays their mortgage down faster than required. The twist is that the people who would benefit most from doing it, those with higher rates, are the ones least likely to do it.

That’s the heart of the question, so let’s work through it with real numbers: who should make extra mortgage payments, who shouldn’t, and how to decide which camp you’re in.

What the Data Says About Extra Mortgage Payments

Rocket Mortgage’s analysis of client payments from January 2021 through January 2026 found that roughly one in four clients makes at least one additional principal payment each year. Among those who do, the average contribution equals about one extra monthly payment annually.

The payoff is real. Using a 6.67% rate (the weekly average as of August 13) and a $221,977 loan, Rocket calculated that one extra monthly payment per year would save about $68,000 in interest and shorten a 30-year loan by nearly six years. A little over two extra payments a year would cut roughly ten years.

At 6.67%, those numbers are compelling. Every extra dollar you send to principal earns a guaranteed 6.67% with zero market risk. Very few investments can promise that.

But those numbers describe a borrower with a higher rate. Reporting on the same data, the Post noted that borrowers who locked in ultralow rates in 2020 and 2021 are actually more likely to pay early than people facing today’s rates. For them, the math flips.

The Core Math: Your Mortgage Rate Is Your Guaranteed Return

Here’s the simplest way to think about it. Every dollar you put toward extra principal “earns” a return equal to your mortgage rate, because it eliminates interest you would otherwise pay. That return is guaranteed. It doesn’t depend on the stock market, the economy, or anything else.

So the real question is always: can you reasonably earn more than your mortgage rate somewhere else, after accounting for risk?

These are general guideposts, not rules. Your situation may differ.

A Worked Example: $50,000 at a 3% Mortgage Rate

Say you have a 3% mortgage and $50,000 in extra cash. You can either send it to your lender or invest it. Here’s a simple, illustrative ten-year comparison, ignoring taxes and fees:

• Pay down the mortgage: you avoid 3% interest on that $50,000. Over ten years, that is worth roughly $67,000 in value ($50,000 compounding at 3%).
• Invest at an assumed 7% average return: $50,000 grows to roughly $98,000 over ten years.

That’s a gap of about $31,000 in favor of investing. Notice the word assumed. Investment returns aren’t guaranteed, and some years will be negative. But a long-term average well above 3% is a reasonable expectation for a diversified portfolio, and even a relatively safe 4% to 5% yield beats a 3% mortgage.

Now flip the example. Same $50,000 against a 7% mortgage: paying it down is a guaranteed 7% return, which matches or beats what many investors realistically expect, with none of the risk. That’s the whole story in one comparison.

Who Should Focus on Paying Off Their Mortgage Faster

1. Homeowners With a Higher Rate (Roughly 6.5% and Up)

If you bought or refinanced in the last year or two, your rate may be 6.5% or higher. Extra principal payments are a guaranteed high return. And if you have a high rate, extra payments aren’t your only lever. A future refinance could lower the rate itself. We break down the break-even math in our guide on when to refinance after buying at a high rate.

2. People Who Are Near or In Retirement

A paid-off home means a much lower monthly cost of living, and that matters when income is fixed. If you’re within a few years of retiring, entering retirement with no mortgage payment can reduce how much you need to withdraw from savings each month. The calculation here is as much about cash flow and peace of mind as it is about rate of return.

3. Borrowers Trying to Drop Mortgage Insurance

If you put less than 20% down on a conventional loan, you’re paying private mortgage insurance (PMI). Extra payments get you to 80% loan-to-value faster, which allows you to request PMI removal. That can add up to a big, immediate monthly savings. (Note that FHA mortgage insurance works differently, and on many FHA loans it stays for the life of the loan, so talk to your mortgage banker before making a plan.)

4. Anyone With an Adjustable Rate on the Horizon

If your ARM is about to reset to a higher rate, reducing the balance before the adjustment limits how much the higher rate can cost you.

5. People Who Are Highly Risk-Averse

If market swings keep you up at night, the guaranteed return of paying down debt may be worth more to you than a higher expected return that comes with volatility. That is a legitimate choice. A plan you can stick to beats a theoretically optimal plan you’ll abandon in a downturn.

Who Should NOT Prioritize Paying Off Their Mortgage Early

1. Homeowners With a Low Fixed Rate (Under About 4%)

This is the group the Post column is talking about. A 2.75% or 3.25% fixed mortgage is some of the cheapest long-term debt you will ever have. Paying it off early means giving up money you could be earning elsewhere at a higher rate. If you’re sitting on one of these loans, think twice before tossing extra cash at it. Our post on the lock-in effect and how to run the real numbers explains why these loans are so valuable.

2. Anyone Without a Solid Emergency Fund

Home equity is not cash. Once you pay down your mortgage, you can’t get that money back without selling or borrowing against the house, and borrowing costs money and requires qualifying. Before you send extra to the lender, make sure you have three to six months of expenses in an accessible account.

3. People Carrying High-Interest Debt

Credit cards at 22% beat a 3% mortgage every time. Pay those off first. It’s the highest guaranteed return available to most people.

4. Anyone Missing Out on an Employer Retirement Match

If your employer matches 401(k) contributions and you aren’t capturing the full match, that is an instant 50% to 100% return. No mortgage payoff can compete.

5. People Who Need Flexibility

If you may need cash for a business, a career change, a child’s education, or a medical expense, putting everything into your house reduces your options. Liquidity has value, especially when you can’t predict the future.

6. Homeowners Whose Wealth Is Already Concentrated in Their Home

For many families, the house is already the largest asset by far. Putting even more into it can leave you less diversified than you realize.

The Middle Path: You Don’t Have to Choose All or Nothing

The pay-off-or-invest question is often framed as a binary choice, but most people do best with a blend. A few ways to split the difference:

• Follow the order of operations: emergency fund first, then any employer match, then high-interest debt, then compare your mortgage rate to your expected investment return.
• Split extra cash: put half toward principal and half toward investments, then adjust over time as your comfort level changes.
• Make one extra payment a year: as Rocket’s data shows, a single additional payment annually, funded by a bonus or tax refund, makes a large difference without straining your monthly budget.
• Pay extra only while your rate is high: if you plan to refinance when rates drop, aggressive paydown today may be less valuable than saving cash for the refinance.
• Use a recast: some lenders allow you to make a large principal payment and then “recast” the loan to lower your monthly payment without changing your rate. It’s a way to reduce the payment while keeping your low rate.

Common Mistakes With Extra Mortgage Payments

Not specifying “principal only.” If you send extra money without telling your servicer to apply it to principal, they may apply it to the next month’s payment instead, which does nothing to reduce interest. Always mark it clearly.

Ignoring prepayment penalties. Most conventional, FHA, and VA loans don’t have them, but some non-QM and investor loans do. Check your note before you start.

Draining liquidity to hit a payoff milestone. The satisfaction of owning your home outright is real. It’s not worth it if you then have to run up a credit card to cover a roof repair.

Forgetting about the tax picture. If you itemize, mortgage interest may be deductible, which slightly lowers the effective cost of the loan. For most households, the higher standard deduction means this is a small factor, but ask a tax professional if you’re unsure.

What About Refinancing Instead?

If your rate is high, extra payments aren’t your only option. A refinance can reduce your rate and your payment at the same time. Some homeowners also worry that refinancing “resets the clock” on their loan. We cover that directly in our post on whether refinancing resets your loan, and the short answer is that you can keep your payoff date on track by choosing the right term or continuing to make extra payments.

And if you have a lot of equity and a low first-lien rate, a cash-out refinance isn’t always the right move. In that case, a home equity loan or HELOC may keep your low rate intact while still giving you access to cash.

Frequently Asked Questions

Is it smart to pay off your mortgage early?

It depends on your interest rate and your overall financial picture. If your rate is high (above roughly 6%), extra payments are a strong guaranteed return. If your rate is low (under about 4%), you’ll often come out ahead by investing the money instead, as long as you’re comfortable with market risk and have a healthy emergency fund.

How much interest can I save with extra mortgage payments?

It depends on your balance, rate, and how much extra you pay. Rocket Mortgage’s analysis estimated that one extra monthly payment per year on a $221,977 loan at 6.67% would save about $68,000 in interest and cut nearly six years off a 30-year term. At lower rates the savings are smaller because there’s less interest to eliminate.

Should I pay off my mortgage or invest if my rate is 3%?

For most people with a rate that low, investing or saving the difference tends to produce a better result, because the guaranteed return from paying down a 3% loan is small. That said, investments carry risk and mortgages don’t, so your comfort level matters too.

Do extra payments lower my monthly payment?

No. Extra principal payments shorten the loan term and reduce total interest, but your required monthly payment stays the same unless you recast or refinance.

Are biweekly payments worth it?

Paying half your payment every two weeks results in 26 half-payments, which equals 13 full payments per year instead of 12. It’s an easy, low-pain way to make one extra payment annually. Check that your servicer applies the extra to principal and doesn’t charge a fee for the service.

Can I pay off my mortgage early with a VA or FHA loan?

Yes. Neither VA nor FHA loans carry prepayment penalties. Just remember that on many FHA loans the mortgage insurance premium continues regardless of your balance, so paying down the loan doesn’t always remove it.

The Bottom Line

The most useful takeaway from the Post’s reporting isn’t “never pay off your mortgage” or “always pay it off.” It’s that the right answer depends almost entirely on your interest rate. A homeowner at 6.75% and a homeowner at 2.9% are facing completely different decisions, even though they have the same instinct to get out of debt.

If you have a high rate, extra payments (or a refinance) deserve serious attention. If you have a low rate, protect it, keep your cash flexible, and let your money work somewhere else. And if you aren’t sure which camp you’re in, run the numbers before you write the check.

Our Extreme Mortgage Bankers are happy to look at your loan with you, no pressure and no obligation. We’ll tell you honestly whether extra payments, a refinance, or leaving well enough alone is the smartest move for your situation.

Talk to an Extreme Mortgage Banker today.

This article is for general educational purposes and is not tax, investment, or legal advice. Investment returns are not guaranteed. Consult a qualified financial or tax professional about your individual circumstances.