By Jeff Ostrowski, Bankrate.com

Can you pay off your mortgage early?

The short answer is yes — you can pay off your mortgage early. This is referred to as prepaying a mortgage.

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Most mortgages don’t come with a prepayment penalty, so you can make extra payments or pay off the loan in full at any time without incurring a fee.

If you’re not sure whether your loan includes this fee — again, most don’t — refer to page one of your closing disclosure, or look for a section in your mortgage note related to the “right to prepay.” Alternatively, you can ask your mortgage servicer.

Will other investments beat paying off a mortgage early?

Investing has no guarantees, but according to some experts, it often makes more sense than funneling your money into your mortgage.

“Sadly, the math tells us it’s almost always better to invest in other places than in your mortgage,” says Richard Bowen, CPA and owner of Bowen Accounting in Bakersfield, California.

Case in point: Current mortgage rates are still somewhat lower than long-term stock market returns. On average, the S&P 500 has returned about 10% over the last 90 years.

However, that S&P average ignores volatility in returns. While you might see a 10% appreciation over the long term, you could see a year, five years or more with much lower returns. For many people, that’s a compelling reason to pay off debt instead.

“The thing is, no one can give you a guarantee on an investment,” Bowen says. “You can put your money in the stock market and lose it. You can put your money in real estate, and it doesn’t perform as well as you expected it to.”

Will all your cash be tied up in the home?

Your home is considered a non-liquid asset because it can take months or longer — plus the cost of a real estate agent, repairs and other expenses — to sell the property and access the capital. It also takes time and money to get a second mortgage.

Before you pay off your mortgage, make sure you have an emergency fund, as well as a mix of assets like stocks, mutual funds, U.S. Treasuries, bonds and marketable securities available in a taxable investment account. These are easier to convert to cash in a pinch.

For your emergency fund, it’s best to maintain a cushion that protects you for at least six months, Bowen says.

How will you use the money if you don’t pay off your mortgage early?

Be realistic about what you’ll likely do with your money if you don’t use it to retire your mortgage debt.

It might make sense, for example, to pay off your mortgage early if you struggle with keeping money in the bank. Your home can be a forced-savings tool, and making extra payments can save you thousands of dollars in mortgage interest over time, plus you’ll build equity in your home more quickly.

“The right thing to do is the thing you will do,” Bowen says. “All of this has to do with personal habits. If you’re going to blow through the extra money anyway, then it’s better that you put it into your house than spend it.”

If you decide there are better ways to use your money than paying off your mortgage, consider:

Increasing your retirement savings
Funding your child’s education
Paying off high-interest credit cards, personal loans or student loan debt

How much do you value peace of mind?

Sometimes, it’s less about the bottom line and more about peace of mind. Owning your home free and clear can have benefits that aren’t measurable in strictly financial terms. For example, if you’re about to retire, eliminating your monthly mortgage payment can make it easier to consider living on a fixed income.

Paying off your home also increases your ability to borrow against the equity in your home. You could establish a home equity line of credit (HELOC) as a source of emergency income or to make progress toward other financial goals.

Pros and cons of paying off your mortgage early

Pros:

Saves you money on interest, sometimes a significant amount
Clears you of the debt, which could give you greater feelings of security
Eliminates a monthly payment (but not homeowners insurance or property taxes)
Increases your equity ahead of schedule, as well as your ability to borrow against your home

Cons:

Ties up your money in your home, making it tougher to access
Diminishes the opportunity to invest or pursue other financial goals
Removes the ability to claim the mortgage interest tax deduction
Could have a temporary, negative impact on your credit by reducing your credit mix and the average age of your accounts

How to prepay your mortgage

If you decide paying off your mortgage early is the right move, there are a few different ways to go about it, including:

Making one large payment: This strategy may work if you receive an inheritance or another lump sum. You may also be able to recast your mortgage, which lowers your monthly payment.
Making occasional extra payments over time: If you have extra cash in a given month, you can put it toward your mortgage principal.
Use a strategy like making biweekly payments: If your extra income is predictable, you could commit to a regular schedule of additional payments.

FAQ

Will paying my house off early hurt my credit?

Paying off your mortgage early doesn’t hurt your credit score in the long run. You might notice a slight temporary drop because the average age of your accounts will decrease, and you’ll have a less robust mix of types of credit.

Is there a tax disadvantage to paying off a mortgage?

It depends. Many homeowners no longer benefit from the mortgage interest deduction because the higher standard deduction saves them more at tax time. If you do itemize deductions, though, and you no longer have a mortgage, you won’t be able to include that interest. If you’re concerned, ask your tax preparer to walk you through how paying off the mortgage will affect your tax picture.

©2025 Bankrate.com. Distributed by Tribune Content Agency, LLC.

By STAN CHOE, Associated Press Business Writer

NEW YORK (AP) — U.S. stocks are adding to their records on Friday as Wall Street cruises toward the finish line of another winning week.

The S&P 500 rose 0.2% and is heading for its seventh winning week in the last nine. The Dow Jones Industrial Average was up 167 points, or 0.4%, as of 9:35 a.m. Eastern time, and the Nasdaq composite was 0.2% higher. All three indexes are coming off all-time highs set the day before.

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Trading could get bumpier later in the morning after reports come out showing how businesses in U.S. services industries are doing. Ahead of them, Treasury yields in the bond market were also holding relatively steady.

Usually, the first Friday of each month has Wall Street focused on the monthly jobs update that the U.S. government publishes. It shows how many jobs employers created and destroyed, while also updating the unemployment rate.

Such data is particularly important now, given how much on Wall Street is riding on the expectation that the job market is continuing to slow by enough to get the Federal Reserve to keep cutting interest rates. But the shutdown of the U.S. government, now in its third day, is delaying the release.

So far, the U.S. stock market has looked past such delays, which also includes Thursday’s report on unemployment claims. Past shutdowns of the U.S. government have tended not to hurt the economy or stock market much, and the thinking is that this one could be similar, even if President Donald Trump has threatened large-scale firings of federal workers this time around.

Excitement around artificial intelligence and the massive spending underway because of it are a major reason the U.S. stock market has hit record after record, along with hopes for easier interest rates.

The industry got another boost after Japan’s Hitachi signed a memorandum of understanding with OpenAI related to powering AI. It followed a set of announcements by OpenAI with South Korean companies the day before.

Hitachi’s stock jumped 10.3% in Tokyo, and tech stocks in the United States drifted higher. Nvidia added 0.6%, and Broadcom rose 1.5%.

But AI stocks have become so dominant, and so much money has poured into the industry that worries are rising about a potential bubble that could eventually lead to disappointment for investors.

On the losing end of Wall Street was Applied Materials, which sank 2.5%. The company, whose equipment helps make semiconductor chips, said it will take a roughly $110 million hit to its revenue in the fourth quarter because of a new U.S. Commerce Department rule expanding export restrictions to certain customers based in China.

In stock markets abroad, indexes were mixed across Europe and Asia.

Japan’s Nikkei 225 was a big winner, and rose 1.9% thanks in part to Hitachi’s jump.

In the bond market, the yield on the 10-year Treasury edged down to 4.09% from 4.10% late Thursday.

AP Writers Teresa Cerojano and Matt Ott contributed.

By LINDSAY WHITEHURST, Associated Press

WASHINGTON (AP) — The Supreme Court said on Friday that it will take up its latest gun rights case and consider striking down strict regulations on where people can carry firearms in Hawaii.

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President Donald Trump’s Republican administration had urged the justices to take the case, arguing the law violates the court’s 2022 ruling that expanded gun rights by finding the Second Amendment generally gives people the right to carry firearms.

The court will consider Hawaii’s restriction banning guns on private property unless the owner has specifically allowed them. The law also prohibits firearms in places like beaches, parks, bars and restaurants that serve alcohol.

State attorneys argue that they’ve already loosened its concealed-carry permit regulations to align with the high court’s 2022 ruling. They say its new restrictions strike a reasonable balance between gun rights and public safety.

A judge blocked the Hawaii law after it was challenged in court by a gun rights group and three people from Maui. But the 9th U.S. Circuit Court of Appeals largely reversed that decision and allowed Hawaii to enforce the law.

Four other states, including New York, have laws banning guns in areas often referred to as sensitive locations. Another appeals court largely upheld the New York law but struck down the the private-property restrictions similar to those in Hawaii.

The Supreme Court has previously declined to hear a challenge to the New York law.

By CHRIS MEGERIAN, Associated Press

WASHINGTON (AP) — President Donald Trump’s administration will withhold $2.1 billion for Chicago infrastructure projects, the White House budget director said Friday, expanding funding fights that have targeted Democratic areas during the government shutdown.

The pause affects a long-awaited plan to extend the city’s Red Line train. The money was “put on hold to ensure funding is not flowing via race-based contracting,” budget director Russ Vought wrote on social media.

FILE – A Chicago Transit Authority train pulls into the new Damen Ave. station just two blocks from the United Center, Aug. 12, 2024. (AP Photo/Charles Rex Arbogast, File)

Vought made a similar announcement earlier this week involving New York, where he said $18 billion for infrastructure would be paused, including funding for a new rail tunnel under the Hudson River.

Trump, a Republican, has embraced Vought’s tactics. On Thursday night, he posted a video depicting him as the reaper, wearing a hood and holding a scythe.

Losing the money would be a significant setback for Chicago’s transportation plans. The Red Line extension is slated to add four train stops on the city’s South Side, improving access for disadvantaged communities.

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In addition, a broader modernization project for the Red and Purple lines, which Vought said was also being targeted, is intended to upgrade stations and remove a bottleneck where different lines intersect.

In New York’s case, Trump’s Transportation Department said it had been reviewing whether any “unconstitutional practices” were occurring in the two massive infrastructure projects but that the government shutdown, which began Wednesday, had forced it to furlough the staffers conducting the review.

The suspension of funds for the Hudson River tunnel project and a Second Avenue subway line extension is likely meant to target Senate Democratic leader Chuck Schumer, whom the White House is blaming for the impasse. The New York senator said the funding freeze would harm commuters.

“Obstructing these projects is stupid and counterproductive because they create tens of thousands of great jobs and are essential for a strong regional and national economy,” Schumer said on X.