Not So Secret Ways to Pay Off Your Mortgage Sooner and Save Thousands

Nikki WallerDirector of Financial & Relational Development

I keep seeing this advertisement that says, “One easy little-known trick to pay off your mortgage 15 years sooner,” and its just clickbait. The truth is, the only way to pay your mortgage off sooner is to pay more each month. But what difference can it make? We have the answers.

First, when it comes to saving money on your mortgage, you should start by looking at your mortgage rate.  

Mortgage rates are constantly fluctuating. In late 2012 the average interest rate for a 30-year fixed-rate mortgage dropped to 3.31%. The highest mortgage interest rate was really high, in 1982 the average interest rate for the same mortgage rose to 18.45%.

The average interest rate for 2018 was 4.82%. A little shopping around can yield very different rates. If you’re interested in different available rates a great place to check is  Shopping for the best interest rate is the first step to paying your mortgage off early. With a 30-year fixed-rate mortgage at 4.5%, you will pay over $80,000 on a $100,000 mortgage. With the same mortgage at 4% interest, you’ll pay just over $70,000 in interest. 

Paying $100 more per month can shave years off your loan term. All payments made over the monthly due amount will help you build equity and reduce your debt more, and you’ll pay significantly less in interest over time. See the table below for a better explanation.

*Monthly payment does not include taxes and insurance

*Monthly payment does not include taxes and insurance

If you made $100 extra payment every month for the life of your loan, you’ll save thousands and pay your loan off almost 8.5 years early. With this $100,000 30-year fixed-rate mortgage at 4.5% interest, the difference is astounding.


Does $100 a month seem unrealistic? We put $1,000 once a year into the calculator, and the results were almost identical. Imagine taking $1,000 from your tax return and paying it on your mortgage. You could save nearly $24,000 in interest on your home mortgage and pay it off 8 years early.

Also, building your equity with extra payments helps you ditch Private Mortgage Insurance sooner. Once you’ve paid 20% of the value of the home, more of your monthly payment will be applied to your principal amount. 

I know we’ve peaked your interest. Visit Mortgage Professor to put your numbers into the calculators and find a plan that works best for you. See what an extra payment each month will do for your mortgage. 

By saving $1,000, you can have up to $5,000 for a down payment on your home through an Individual Development Account from HOPE. HOPE does not offer mortgages to home buyers, but we do offer down payment assistance to those who qualify. Those who make too much for an Individual Development Account may still qualify for financial assistance through our Down Payment Assistance program. It’s worth the phone call to Tony, our housing counselor. 812-423-3169 to see if you qualify.

Lenders can overestimate how much home you can buy. Don’t let a lender tell you what you can afford to buy. Crunch your own numbers and save room for error and for emergencies such as a job loss, income reduction, or a health crisis. Be sure to keep in mind that living beneath your means will save you a lot of stress during difficult times. 

The more you learn about mortgages, the more you might save. To learn more about how to purchase a home using the HOPE Down Payment Assistance programs, contact Tony at HOPE today at 812-423-3169.