conversation: User (Klras): "Could someone explain to me the pros/cons of paying mortgage off early? From what I've looked up, if I'm understanding it correctly, paying extra, small amounts on the loan isnt a good idea? When i tried to read through the explanation of WHY that particular article was making that statement, I realized it was written for people much smarter than me because I couldn't understand half of what was written lol. Math has never been easy for me and the explanation was one big math problem it seemed.\nNow, if the small extra payments are not a good idea, what about making large payments? Say a few thousand extra per month to pay off the loan very quickly (within 5-10 years)? What would be pros and cons? Wouldn't this save me a lot in interest? Maybe someone can explain in simpler terms than the article I was reading, it would be much appreciated!!\n\nLoan details: 30 year, $135,800 with a 4.875% interest rate conventional loan, no prepayment penalties. Fixed interest rate\n\nEDIT: just to clarify, I do understand that this will not decrease my monthly payment and that I am still expected to pay my monthly payment after making extra payments."
  Self: "Making extra payments on a loan isn't necessarily a bad idea, as long as those payments are getting applied to the principal of the loan. The amount of interest calculated (and eventually paid by you) will be less if the remaining principal balance on the loan is less.\n\n*However* some financial planners and many participants on /r/personalfinance will tell you that instead of overpaying your loan to save yourself the 4.875% interest, that you could put those extra payments into something (like a 401K) that is likely to get you a better return (i.e. the money you make from investing could potentially exceed the money you save from not paying additional interest on your loan)."
  Callmedory (Callmedory): "This is great advice for most people, though it leaves out (for good reason) the emotional plus of being mortgage-free.\n\nI took a chunk of an inheritance and paid down our mortgage (we've since paid it off).  Running the numbers, we paid in $70K and saved $34K in interest of the remaining life of the loan (8 years?).  We lost the mortgage deduction, but that wasn't so much by comparison.\n\nTBH, we're using what *was* the mortgage to prep the house for future retirement--major improvements on a 75yo house, including solar, replacing a aged furnace/AC, abating asbestos, re-wiring, redoing the bathrooms for easier access, etc.\n\nAs for 401k &amp; IRAs, those are maxed out annually anyway."
  