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Should I Pay Extra on My Mortgage?
It depends on one number: your mortgage rate. Paying extra on your mortgage gives you a guaranteed return equal to your rate. At 6.4%, that's a guaranteed 6.4%/year - better than bonds, competitive with the stock market, and completely risk-free. Whether it beats investing depends on your rate, your debts, and your timeline.
The rate threshold - pay extra or invest?
| Your mortgage rate | What it means | Recommendation |
|---|---|---|
| Under 4% | Borrowing cheap money | Invest - market likely beats your rate |
| 4% – 5.5% | Toss-up zone | Split: invest AND pay extra |
| 5.5% – 7% | Competitive with market | Pay extra - guaranteed return is hard to beat after taxes |
| Above 7% | Expensive debt | Pay extra aggressively before investing |
S&P 500 averages 7–9%/year long-term, but that's before taxes and with full volatility. Your mortgage paydown return is guaranteed and tax-advantaged.
At today's 6.4% average rate: paying extra is a guaranteed 6.4% return. After-tax stock market returns are often 5–6%. For most homeowners in 2026, this is genuinely competitive - not an obvious win either way.
What $100, $300, and $500 extra per month actually saves
Base assumption: $320,000 loan, 6.4% rate, 30-year term. Standard payment: $1,999/mo.
| Extra /month | Payoff time | Interest saved | Years cut |
|---|---|---|---|
| $0 (baseline) | 30 years | - | - |
| +$100/mo | 26.5 years | ~$48,000 | 3.5 years |
| +$300/mo | 22 years | ~$103,000 | 8 years |
| +$500/mo | 19 years | ~$144,000 | 11 years |
| +$1,000/mo | 14.5 years | ~$198,000 | 15.5 years |
Assumes $320,000 loan at 6.4%, 30-year fixed. Extra payments applied to principal. Actual savings vary by loan balance and when payments begin.
Extra payments have the biggest impact early in the loan when most of your payment goes to interest, not principal. An extra $300/mo in year 1 saves far more than the same $300/mo in year 20.
Before you send extra to principal - check these first
Emergency fund
Build 3–6 months of expenses in cash before any extra mortgage payments. If your roof leaks or you lose your job, you can't pull money back out of your mortgage equity without refinancing or selling.
High-interest debt
Pay off any debt above 7–8% first - credit cards, personal loans. There's no point getting a guaranteed 6.4% return on mortgage paydown while paying 22% on a credit card.
401(k) employer match
If your employer matches 401(k) contributions, capture the full match first. A 50% or 100% employer match is an instant return nothing else can compete with.
PMI elimination
If you're paying PMI ($100–$375/mo), directing extra payments toward reaching 20% equity eliminates PMI - an immediate, recurring saving with no risk.
Three scenarios - which one are you?
- →Extra $400/mo saves ~$160,000 in interest
- →Payoff: 22 years instead of 30
- →Guaranteed return: 6.8%
Your rate is high enough that paying extra is a strong, guaranteed return. You've done the prerequisites. Every extra dollar directly reduces your most expensive debt.
- •Rate is in the toss-up zone vs market returns
- •Split $500/mo: $250 extra on mortgage + $250 into index fund
- •Mortgage: saves ~$68,000, payoff 4 years early
- •Investing: ~$87,000 after 15 years at 7% avg return
At 5.8% you're in the toss-up zone. Splitting hedges both sides - you reduce debt AND build investment wealth. Neither choice is wrong; splitting reduces the risk of being wrong on either.
- •Guaranteed return from paydown: 3.2%
- •Expected after-tax market return: 5–6%
- •Opportunity cost: ~$2,800/yr on $50k invested at 6% vs 3.2%
With a sub-4% rate, you're borrowing at below-inflation cost. The market will almost certainly beat 3.2% over 20 years. Keep making minimum payments and invest the difference.
Run your exact numbers
Primary tool for this guide
Extra Mortgage Payment Calculator
Enter your loan balance, rate, and extra payment amount. See exact interest saved and years cut from your loan.
Bottom line
Pay extra if your rate is above 5.5%, your emergency fund is solid, and you have no high-interest debt. At 6.4%, it's one of the best guaranteed returns available to you right now.
In the 4–5.5% range, split the difference. You don't need to pick a side - dividing your extra cash between debt paydown and investing is a legitimate strategy, not a cop-out.
If your rate is under 4% and you have 15+ years left, investing almost certainly wins over the long run. Keep the cheap mortgage and let compound growth do its job.
Estimates based on your inputs. Actual results may vary. Terms →