Short answer
Paying extra toward principal lowers your balance faster, which cuts the interest you pay and can take years off the loan. Your required monthly payment usually stays the same. Before you start, check your loan papers for a prepayment penalty, and tell your servicer the extra money is for principal. Most people keep an emergency fund first, since money paid into the home is hard to get back out.
What are the common ways to pay extra?
- A set extra amount added to each monthly payment.
- One lump sum a year, such as from a tax refund or bonus.
- Splitting the payment so you make the equal of one extra payment each year. Ask your servicer first; some don't accept partial payments, and some third-party plans charge fees for something you can do yourself.
See the difference with the mortgage payoff calculator.
How do I make sure it goes to principal?
Use the principal-only option in your servicer's online payment screen, or write it on the coupon or check. Then look at your next statement to confirm the balance dropped by the extra amount. If something looks wrong, contact your servicer in writing and keep a copy.
Can my lender charge me for paying early?
Some loans have a prepayment penalty, a fee for paying off all or part of the loan early. You would have agreed to it at closing, so check your note and Closing Disclosure. Federal rules limit when one is allowed: only on certain fixed-rate qualified mortgages that aren't higher-priced loans, never after the first three years, and capped in amount. A lender that offers a loan with a penalty must also offer you an option without one. Small extra principal payments normally don't trigger a penalty, but check with your servicer.
Is paying extra always the best move?
Not always. Many people pay off higher-interest debt and build savings first. It also doesn't lower your monthly payment, and it doesn't help if you fall behind, since the next payment is still due. If you have escrow, your taxes and insurance still change on their own; see property tax bills and escrow.
Sources
Checked November 2, 2026. Rules and dates change, so confirm current details before you rely on them.
General information only, not tax or legal advice. Program availability, eligibility and terms vary by lender and are subject to change and to underwriting approval. Not a commitment to lend.