Make A New Year’s Resolution To Pay Off Your Home Sooner – The Mortgage Note

Many Americans are making a New Year’s resolution to become more financially secure in 2025 and one way to do that is to reduce or eliminate debt.

The biggest debt most homeowners face is their mortgage. Paying that down, or off, could save people thousands of dollars in interest and give them financial peace of mind.

Experts say homeowners can achieve this by making bi-weekly instead of monthly payments, applying extra income towards the loan’s principal, and refinancing to a shorter term to expedite mortgage payoff.

Allison Sanka, accredited financial counselor and financial coach at Journey Financial Wellness in Pennsylvania, paid off her house in 16 years instead of 30 and saved over $150,000 in interest with refinancing strategies.

“We started with an FHA loan with 10% down and 4.5% interest (in those days, that was high),” said Sanka. “Four years later, once we paid off 20% of the equity, we refinanced to a 15-year loan at 3.3% to eliminate PMI. The monthly payment was a little higher, but we were making more income so we could afford it. Then, when rates dropped under 3, we refinanced to a 10-year at 2.3%.”

The final payment was about $800 higher than when they started but was less than renting, even with repairs and upkeep. With the lower interest rate and shorter term, it was a no-brainer for Sanka.

Of course, those days of low-interest offers are past, but there are still ways people can plan to refinance their loans in ways that will benefit them financially. It is advised they start by using a rate comparison calculator on an impartial website that isn’t trying to sell them a mortgage.

“Map out all the details and see how long it will take to pay off any closing costs,” said Sanka. “If your credit is good, rates have dropped significantly, and you plan on staying in the house long term, it most likely will make sense and can save tens of thousands, if not hundreds of thousands of dollars, over the life of your loan. If it’s not quite time to refinance, continue saving to have cash to pay for the closing costs so you aren’t rolling those into your mortgage.”

Sanka advises people to consider other goals for financial freedom when making these decisions. For example, making sure their retirement savings are solid, and they will have enough in retirement, before allocating more cash to a mortgage.

Blake Whitten, a financial advisor at Whitten Retirement Solutions in Maryland, said his best recommendation for setting up a mortgage for early payoff is to establish a clear, actionable plan aligned with financial goals and cash flow.

Whitten suggests opting for a mortgage with no prepayment penalties to retain the option of extra payments without additional costs.

“Start by setting up bi-weekly payments instead of monthly payments, making one extra full payment each year,” said Whitten. “This small adjustment reduces your principal faster and saves significant interest over time. Also consider making lump-sum payments toward the principal whenever possible, such as when you receive a tax refund, bonus, or other windfall. To ensure success, budget for these additional payments and make them part of your financial routine.”

Homeowners should refinance their mortgage to a shorter term, such as a 15-year loan, if it aligns with their budget, he said.

“While monthly payments may increase, the long-term interest savings and expedited payoff are substantial,” said Whitten. “It’s also essential to periodically review your loan terms and interest rate; even a modest reduction in your rate can speed up your payoff timeline.”

What about rate buydowns?

Borrowers can get a lower interest rate on their mortgage loan by putting additional money down upfront. These buydowns are an option when purchasing or refinancing a primary residence or second home.

Matt Schwartz, co-founder at VA Loan Network in Texas, said a temporary buydown allows funds to be applied to either the principal balance or refunded if the loan is refinanced before the buydown term ends, benefiting borrowers either way. In contrast, a permanent buydown reduces the interest rate for the loan’s life, but once the loan is paid off or refinanced, the benefit is lost.

“Temporary buydowns are best when covered by the seller, and with permanent buy downs, it’s crucial to ensure you’ll keep the loan long enough to recoup the upfront costs, especially in a fluctuating rate environment,” said Schwartz.

These tips hold true north of the border.

Samantha Odo, a real estate sales expert and Montreal division manager at Precondo in Canada, says homeowners there should also seek out a mortgage that allows them to pay more each month or make one big payment to reduce the amount owed.

This can save people thousands of dollars in interest, she said.

“It’s also a big deal to change your payments to every two weeks instead of every four weeks. This has helped clients cut years off their mortgages. Even though these extra payments may not seem like much at first, they save a lot of money over time,” Odo said.

Odo said that refinancing to a shorter loan time, like 15 years instead of 25, also helps pay off mortgage debt faster.

“Even though the payments may seem bigger at first, this makes sure that more of your money goes toward paying off the debt and not interest,” said Odo. “Keep an eye on early payment fees, as they could make these strategies less useful. Also, I tell people to look at their debt once a year to see if they can handle making small payments more often as their money gets better.”

Americans owe $12.59 trillion on 85 million mortgages, according to LendingTree. That comes to an average of just over $148,000 per person with a mortgage on their credit report.

Mortgages represent 70.2% of U.S. consumer debt.