Paying extra on your mortgage

All three approaches work. The earlier the money goes in, the more interest it saves.

• Monthly: a set amount added to each payment. This is easy to automate.
• Biweekly: half a payment every two weeks adds up to 13 full payments a year. You can do this yourself at no cost. Be careful with paid biweekly programs; the CFPB has sued a company over misleading savings claims.
• Lump sum: a one-time payment, such as a bonus or tax refund. Some servicers will recast a loan after a large lump sum, lowering the payment for a fee. Many do not. Ask yours before you rely on it.

Every extra dollar of principal saves interest at your mortgage rate, with no risk. That rate is the number to compare against.

• Debt with a higher rate costs you more than your mortgage does.
• Savings and investments may earn more or less than your rate, with different risk.
• Cash you can reach matters. To get equity back out, you would need to sell, refinance or borrow against the home.

There is no single right answer. It depends on your rate, your other debts and how much cushion you have.

On a conventional loan, you can ask to remove mortgage insurance once your balance reaches 80% of the original value, and that point can come early if you have paid extra. It ends automatically at 78% on the original schedule.

Extra payments do not remove FHA mortgage insurance. With less than 10% down, it stays for the life of the loan no matter the balance. Removing it requires refinancing.