Our top picks of timely offers from our partners

More details
UFB Secure Savings
Learn More
Terms Apply
Up to 5.25% APY on one of our top picks for best savings accounts plus, no monthly fee
Accredited Debt Relief
Learn More
Terms Apply
Accredited Debt Relief helps consumers with over $30,000 of debt
LendingClub High-Yield Savings
Learn More
Terms Apply
Our top pick for best savings accounts for its strong APY and an ATM card with no ATM fees
Choice Home Warranty
Learn More
Terms Apply
Protects 25+ systems & appliances. Free quote + $50 off + 1 month free
Freedom Debt Relief
Learn More
Terms Apply
Freedom Debt Relief can help clients get started without fees up front
Select independently determines what we cover and recommend. We earn a commission from affiliate partners on many offers and links. This commission may impact how and where certain products appear on this site (including, for example, the order in which they appear). Read more about Select on CNBC and on NBC News, and click here to read our full advertiser disclosure.

There are 3 common strategies for paying off your mortgage early — here's how to decide which is best for you

Follow these simple steps to pay off your mortgage ahead of schedule and save money on interest.

Thianchai Sitthikongsak | Moment | Getty Images

Many homeowners dream of having a paid-off home and achieving financial freedom sooner, but they are often uncertain about how to make it happen. Homeowners typically make their normal monthly mortgage payments and expect to pay off their homes over 30 years. However, there are ways to pay it off even faster using three proven strategies.

Ahead, CNBC Select covers what the three early mortgage payoff strategies are, the pros and cons of each one and which method is best for your situation.

Subscribe to the CNBC Select Newsletter!

Money matters —  so make the most of it. Get expert tips, strategies, news and everything else you need to maximize your money, right to your inbox. Sign-up here.

How can I pay off my mortgage faster?

If you're interested in paying off your mortgage faster, there are multiple ways to make it happen. The best strategy for you often depends on your credit score, cash flow and financial discipline.

Refinance into a shorter term

When you refinance your home, you can pay off your home faster by replacing your 30-year mortgage with one that's a shorter term. With a mortgage refinance, you can shorten your loan term by selecting a 20, 15, or even a 10-year loan.

By selecting a shorter term, your monthly payment may increase. However, many homeowners are earning more today than when they first bought their homes. With this higher income, you may be able to easily afford a small increase to your monthly payment.

Refinancing your mortgage may lower the interest rate or eliminate mortgage insurance premiums. By reducing interest charges and getting rid of mortgage insurance premiums, these savings can offset the increase in your monthly payment. One of the best mortgage lenders for refinancing is Rocket Mortgage due to its flexible loan repayment terms, fast approval process and lower credit score requirements.

Rocket Mortgage

  • Annual Percentage Rate (APR)

    Apply online for personalized rates

  • Types of loans

    Conventional loans, FHA loans, VA loans and Jumbo loans

  • Terms

    8 – 29 years, including 15-year and 30-year terms

  • Credit needed

    Typically requires a 620 credit score but will consider applicants with a 580 credit score as long as other eligibility criteria are met

  • Minimum down payment

    3.5% if moving forward with an FHA loan

Already have a mortgage through Rocket Mortgage or looking to start one? Check out the Rocket Visa Signature Card to learn how you can earn rewards

Getting the best interest rates and terms on a mortgage often requires excellent credit. If your credit score is lower, take steps to boost your credit before applying. For instance, you may be able to improve your credit score through *Experian Boost™, which allows you to get credit for on-time phone, utility and streaming service payments. A mortgage broker can also review your credit report and offer suggestions on how to improve your credit score.

Experian Dark Web Scan + Credit Monitoring

On Experian's secure site
  • Cost


  • Credit bureaus monitored


  • Credit scoring model used


  • Dark web scan

    Yes, one-time only

  • Identity insurance


Terms apply.

Make extra payments

Refinancing your mortgage can be costly and time-consuming. A potentially simpler way for homeowners to pay off their homes quicker and save on interest charges is by making extra payments. There are three primary methods for making extra payments – pay extra each month, make a lump sum payment or switch to bi-weekly payments.

  • Paying extra each month. When making your payments, add extra money to pay down your balance a little bit at a time. This not only lowers your overall balance but also reduces your interest charges and shortens the loan term.
  • Making lump sum payments. Some borrowers make lump-sum payments to reduce their loan balance in big chunks. You'll pay down your loan by taking bonuses, tax refunds and other large sums of money to reduce the balance and interest charged.
  • Converting to bi-weekly payments. The first two methods require you to pay extra manually, but this one locks you into a quicker mortgage payoff. Many banks allow borrowers to convert to a bi-weekly payment option for a small fee. Making payments every two weeks results in making one extra monthly payment each year.

All three options enable borrowers to repay their existing loans quicker without paying mortgage refinance costs. There are no fees for making extra payments manually, though you should watch out for potential prepayment penalties. Additionally, some banks charge a fee for converting payments to bi-weekly versus monthly. Do the math to ensure the benefits outweigh the costs.

Don't miss: Here's how much of your monthly income should go toward debt repayment

Invest in a brokerage or high-yield savings account

When you pay extra towards your mortgage, the return on that money is roughly equivalent to your mortgage interest rate. Generally, mortgage interest rates are substantially less than investors can earn on their investments. By investing in a brokerage account or high-yield savings account instead, homeowners may be able to pay off their homes even faster.

This strategy involves taking your extra payments and investing them instead. By creating this "mortgage payoff fund," you retain flexibility with your money and may be able to earn a higher rate of return. With the money in a brokerage or savings account, it remains available in case of an emergency or if you decide to spend it elsewhere.

Investing in a brokerage account involves risks. Although the stock market historically returns about 10%, annual returns fluctuate each year. Your portfolio may be down when you want to withdraw money to pay off your mortgage. Additionally, you may owe taxes on the capital gains and dividends each year and when you sell shares to pay off your mortgage. If you follow this strategy, be prepared to hold onto your investments through the ups and downs of the market.

Don't miss: The 5 best robo-advisors when you want to be hands off with your investments

If you prefer no risk, you can park your cash in a high-yield savings account. There are many high-yield savings accounts, such as LendingClub High-Yield Savings and UFB Secure Savings, that currently earn over 4.00% APY. And because they are generally FDIC-insured up to $250,000, they are virtually risk-free. Government bonds, like I-Bonds and Treasury bonds, are also considered low-risk investments because they are backed by the U.S. government.

LendingClub High-Yield Savings

LendingClub Bank, N.A., Member FDIC
  • Annual Percentage Yield (APY)


  • Minimum balance

    No minimum balance requirement after $100.00 to open the account

  • Monthly fee


  • Maximum transactions


  • Excessive transactions fee


  • Overdraft fees


  • Offer checking account?


  • Offer ATM card?


Terms apply.

UFB Secure Savings

UFB Secure Savings is offered by Axos Bank ® , a Member FDIC.
  • Annual Percentage Yield (APY)

    Up to 5.25% APY on any savings balance; add a UFB Freedom Checking and meet checking account qualifications to get an additional up to 0.20% APY on savings

  • Minimum balance

    $0, no minimum deposit or balance needed for savings

  • Fees

    No monthly maintenance or service fees

  • Overdraft fee

    Overdraft fees may be charged, according to the terms; overdraft protection available

  • ATM access

    Free ATM card with unlimited withdrawals

  • Maximum transactions

    6 per month; terms apply

  • Terms apply.

Which method is best for your situation?

With multiple options to pay off your mortgage faster, how do you know which one is right for you?

  • Mortgage refinancing locks in your payment schedule and typically requires mortgage closing costs. Additionally, current interest rates impact whether or not this is a wise choice. This method is best for people with good credit who want to lock in a monthly payment that puts them on the path of an early mortgage payoff.
  • Paying extra on your mortgage is simple to do without incurring extra fees. However, you must remember to make the additional payments each month or when you receive extra money. Paying extra is best for borrowers with variable incomes or lower credit scores. They're not locked into a higher monthly payment and can pay more when they are able to.
  • Investing in a "mortgage payoff fund" often yields higher returns and provides flexibility, but you may owe taxes on the money you make. This strategy is best for experienced investors who won't panic if the market takes a short-term dip.

Bottom line

Following the traditional 30-year mortgage payoff schedule keeps homeowners in debt and paying large sums of interest. These strategies help borrowers pay off their homes faster and reduce the interest they'll pay. After they own their home free and clear, the savings can be used to meet other financial goals, such as retirement, paying for a child's college education or achieving a debt-free life.

Catch up on CNBC Select's in-depth coverage of credit cardsbanking and money. Follow us on TikTokFacebookInstagram and Twitter to stay up to date.

*Results may vary. Some may not see improved scores or approval odds. Not all lenders use Experian credit files, and not all lenders use scores impacted by Experian Boost.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
Learn More
Terms Apply
Chime offers online-only accounts that minimize fees plus, get paid up to 2 days early with direct deposits
Find the right savings account for you
Learn More
Terms Apply
Help your money grow by finding the savings account that offers the best rates and features for you