If your current mortgage interest rate is five percent, you are guaranteed to “earn” five percent – by saving interest – on any amount of principal you pay off.
Most conventional, FHA, VA and USDA mortgages allow you to make extra payments, also known as prepayments, without any penalty.
Making extra mortgage payments is not the right strategy for everyone, though. Homeowners often refinance instead, into a 15- or even ten-year mortgage. This drastically cuts their interest rate and slices years off their mortgage.