Should You Make Extra Mortgage Payments in 2026?

Have you ever stared at your monthly mortgage statement and wondered what would happen if you just tossed an extra few hundred bucks at it? Maybe you’ve crunched the numbers late at night, dreaming about that glorious day when the house is finally yours free and clear. I get it—there’s something deeply satisfying about chipping away at debt, especially the big one tied to your home. But before you start funneling every spare dollar toward your principal, pause. In my experience helping people sort through these choices, rushing in without weighing everything can sometimes backfire in surprising ways.

These days, with rates hovering around six percent and investment options still delivering solid returns over time, the decision isn’t as straightforward as it once was. Plenty of homeowners feel torn between the emotional win of paying off their mortgage faster and the cold, hard math of potential growth elsewhere. Let’s walk through this together, step by step, so you can make a choice that actually fits your life.

The Big Question: Extra Payments or Something Else?

Most folks who ask about extra mortgage payments want the same thing: less stress, more freedom, and maybe a quicker path to retirement without a house payment hanging over them. That’s completely understandable. Yet the smartest move isn’t always the most obvious one. Sometimes putting that cash to work elsewhere builds more long-term security than shaving years off your loan.

I’ve seen clients in all sorts of situations—some who paid extra religiously and loved the peace of mind, others who invested the difference and ended up with significantly more wealth. The difference almost always comes down to a handful of key factors. Let’s break them down so you can see where you land.

First, Can You Actually Afford the Extra Payment?

Before anything else, check your cash flow. It sounds basic, but so many people skip this step and end up stretched thin. Do you have enough coming in each month to cover essentials, build your emergency fund, and still have something left over? If adding an extra payment means cutting corners on groceries or skipping contributions to other goals, it’s probably not sustainable.

Think about your full picture. A solid emergency fund—three to six months of living expenses—should already be in place. If it’s not, that’s usually the priority. Why? Because life happens. A sudden repair, medical bill, or job change can derail everything if you’re house-poor from overpaying your mortgage.

In my view, financial breathing room matters more than speeding up equity buildup. Comfortably affording the extra amount without stress is non-negotiable. If it feels tight, hold off and focus on boosting income or trimming expenses first.

• Track your monthly income and fixed costs for at least three months.
• Calculate what remains after necessities and savings contributions.
• Ask yourself: Would an unexpected $1,000 hit throw me off track?

If the answer is yes, redirect that energy toward building a stronger financial foundation before tackling the mortgage aggressively.

How Low (or High) Is Your Mortgage Rate, Really?

Your interest rate changes everything. When rates were sitting in the low threes a few years back, many experts said investing almost always beat prepaying. Why tie up money at three percent when the market historically returns closer to eight percent over long periods?

Fast forward to today, and the landscape looks different. Average 30-year fixed rates are floating near six percent in early 2026. That’s not sky-high, but it’s enough to make prepaying more attractive for some. At six percent, you’re paying meaningful interest over decades—potentially tens of thousands extra if you stretch the full term.

Here’s a quick mental benchmark I’ve found helpful: anything under four-and-a-half percent usually favors investing the extra cash. Between five and six percent, it becomes a closer call. Above six-and-a-half, paying down starts looking pretty compelling, especially if you’re risk-averse.

Low-rate mortgages are almost like cheap money. Why rush to pay them off when that cash could grow faster elsewhere?

— Financial planner perspective

Of course, this ignores taxes and inflation, which can make even higher-rate mortgages feel “cheaper” in real terms. Inflation erodes the value of fixed payments over time, so a six percent loan today might effectively cost less down the road. Still, don’t ignore the number on your statement—it’s the starting point for every other calculation.

What About Your Other Debts? Don’t Ignore the Expensive Ones

Mortgages tend to be the cheapest debt most people carry. Compare that to credit cards averaging over twenty percent or even some private student loans pushing into double digits. Paying extra on a six percent mortgage while carrying twenty percent credit card balances is like mopping the floor during a flood.

Financial experts often talk about “good debt” versus “bad debt.” A mortgage is usually good debt—it’s tied to an appreciating asset (your home) and typically has the lowest rate. Bad debt finances things that lose value fast, like cars or everyday purchases on plastic. Knock out the bad stuff first.

1. List all your debts with their interest rates.
2. Focus extra payments on the highest-rate ones (avalanche method) or smallest balances (snowball method) for momentum.
3. Only after high-interest debt is gone should you consider accelerating the mortgage.

I’ve watched clients wipe out credit card debt first, then redirect that same payment to their mortgage or investments. The relief—and the freed-up cash flow—is huge. Skipping this step is one of the most common mistakes I see.

Could That Extra Money Grow More in Retirement Accounts?

This is where things get really interesting. Once high-interest debt is handled and your emergency fund is solid, the next fork in the road is often retirement savings versus mortgage prepayment. The math here can be eye-opening.

Let’s run a realistic scenario. Suppose you have a $300,000, 30-year mortgage at 6.25 percent. Your regular payment is roughly $1,850 monthly. Adding one extra full payment per year shaves about five years off the term and saves around $80,000 in interest.

Now imagine redirecting that same extra $1,850 annually into a retirement account earning an average eight percent return (a reasonable long-term expectation for a balanced portfolio). Over 30 years, that could grow to well over $300,000—sometimes much more depending on compounding and contributions.

Of course, markets aren’t guaranteed. There are down years, volatility, sequence risk if you’re nearing retirement. Paying down the mortgage gives you a guaranteed “return” equal to your interest rate, tax-free in the form of saved interest. It’s risk-free growth in a sense.

Perhaps the most interesting aspect is the psychological side. Some people sleep better knowing their house is paid off. Others prefer the flexibility and growth potential of invested assets. Neither is wrong—it’s about what aligns with your values and risk tolerance.

Are You Still Paying PMI? This Changes the Math

If your down payment was less than twenty percent, you’re probably stuck with private mortgage insurance. PMI costs anywhere from 0.1 to 2 percent of the loan balance annually—on a $400,000 loan, that’s potentially thousands per year gone forever.

Making extra payments to reach twenty percent equity faster can drop PMI sooner. Once it’s gone, that monthly cost vanishes, effectively giving you an instant raise. For many, this alone justifies aggressive prepayment, even if your rate isn’t sky-high.

Check your loan docs or ask your servicer how close you are to the threshold. Sometimes a few targeted extra payments get you there quickly, then you can switch to investing mode.

Other Angles Worth Considering

Beyond the big five factors, a few more details can tip the scales. Tax deductions on mortgage interest still exist for many, though they’re less valuable since recent tax changes. If you’re in a high bracket, the deduction softens the blow of interest, making prepayment less urgent.

Liquidity matters too. Money sunk into your home isn’t easy to access without refinancing or selling. Investments in retirement accounts or taxable brokerage accounts usually offer more flexibility, though early withdrawals come with penalties.

Inflation plays a sneaky role. Fixed mortgage payments get easier as wages and prices rise. Paying off early locks in today’s dollars against tomorrow’s inflated ones—sometimes a win, sometimes not.

Finally, think about your timeline. If retirement is decades away, compounding in investments has more time to work magic. Closer to retirement? The guaranteed aspect of mortgage payoff might feel safer.

Finding Your Personal Balance

There’s rarely a one-size-fits-all answer here. Some people split the difference—half to extra principal, half to investments. Others pay down until PMI drops, then pivot. A few aggressive types throw everything at the mortgage for the mental freedom it brings.

In my experience, the happiest outcomes come when people align the decision with their bigger goals. Want to retire early? Investing might win. Crave debt-free living above all? Prepaying could be perfect. Run the numbers both ways, factor in your emotions, and choose what lets you sleep soundly.

Whatever path you pick, the key is intentionality. Don’t just autopilot extra payments because it feels virtuous. Make sure it serves your overall financial health. You’ve got options—use them wisely.

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