The simplest and most flexible approach: add a fixed extra amount to every monthly payment, earmarked for principal. This is pure principal reduction — it lowers your balance immediately and reduces every future month's interest charge.

The mechanics: send your normal payment plus the extra amount, with a note or account designation specifying "apply to principal." Some servicers have an online option for this; for others, include a note with your payment or call to confirm they're applying it correctly. Never assume extra money goes to principal automatically — some servicers will treat it as an advance payment (pushing your due date forward) rather than reducing your balance.

With an extra $200/month applied to principal on month 1 through payoff:

With $500/month extra:

Instead of making 12 full monthly payments per year, you make 26 half-payments — equivalent to one payment every two weeks. The math: 26 half-payments × 1 = 26 half-payments = 13 full payments per year. That's one extra full payment annually, applied entirely to principal, without the psychological friction of writing a separate "extra" check.

This works well for borrowers paid bi-weekly — the payment timing aligns naturally with paychecks. Set it up directly with your servicer (not a third-party bi-weekly payment service, which often charges fees). If your servicer doesn't offer bi-weekly options, you can replicate it manually by dividing your monthly payment by 12 and adding that amount to each payment.

Paying one additional full payment ($2,270 on this loan) per year — whether from a tax refund, bonus, or any annual windfall — is mathematically equivalent to the bi-weekly strategy. Apply this payment to principal in a single annual lump, typically in January (to maximize the time it reduces your balance and thus the interest charged over the remaining months of the year).

This is the most accessible strategy for people who don't want to change their monthly budget but receive one predictable annual influx of cash. Tax refunds average around $3,000 nationally — more than enough to make this payment and still have money left over.

Any time you receive a significant amount of money — an inheritance, proceeds from selling an asset, a business profit, a legal settlement — directing it to mortgage principal creates a permanent reduction in your balance and future interest charges. The impact is front-loaded: a $20,000 lump sum early in the loan saves far more interest than $20,000 applied in year 20, because there are more future payment periods for the interest savings to compound.

Example: $20,000 lump sum applied to principal at the start of year 1 on this loan:

The same $20,000 applied in year 10: saves approximately $22,000 in interest and cuts about 1.8 years off the loan. Front-loading always wins because interest compounds on the remaining balance.

Refinancing from a 30-year to a 15-year mortgage reduces your loan term by half and typically comes with a significantly lower interest rate. In mid-2026, 15-year fixed rates are running approximately 0.5–0.7% below 30-year rates. On a $350,000 loan at 6.1% for 15 years:

• Monthly P&I payment: ~$2,978 (vs $2,270 at 30-year/6.75%)
• Additional monthly cost: ~$708
• Total interest over 15 years: ~$186,000
• Interest saved vs. remaining 30-year: ~$282,000

The trade-off is payment commitment. A 30-year mortgage with voluntary extra payments gives you flexibility — if your income drops, you can revert to the lower minimum payment. A 15-year mortgage locks in the higher required payment. If you value flexibility (job change risk, variable income), strategy 1 may be preferable to a forced refi.

You'll also pay closing costs on the refinance — typically 2–3% of the loan amount ($7,000–$10,500 on $350,000). Calculate your break-even: divide closing costs by monthly savings to find how many months before the refi pays for itself. Use our refinance calculator to run this math precisely.

Mortgage recasting is a lesser-known option that most large lenders offer but rarely advertise. Here's how it works: you make a large lump-sum principal payment (typically minimum $5,000–$10,000 depending on the lender), and the lender re-amortizes your loan over the remaining term at the reduced balance. The result is a lower required monthly payment with the same interest rate and loan term.

Example: You've paid $50,000 in principal, reducing your $350,000 balance to $300,000 in year 5. You then receive a $30,000 inheritance and apply it to principal (balance now $270,000). A recast re-amortizes this $270,000 over the remaining 25 years, lowering your required payment from $2,270 to approximately $1,972/month — freeing up $298/month in cash flow.

Recasting is ideal when you want lower required payments (improved monthly cash flow) rather than a shorter loan. It typically costs $150–$500 in administrative fees. It's not available on FHA or VA loans, and you must request it explicitly — servicers don't offer it automatically after large payments.

The lowest-friction strategy of all: simply round your payment up to the next convenient number. If your payment is $2,270, pay $2,300 or $2,500 every month — the difference goes to principal. This requires zero planning, no servicer coordination beyond marking payments as principal, and barely registers in your monthly budget.

Rounding up by $30/month ($2,300 total): saves about $7,200 in interest and cuts 5 months off the loan. Rounding up by $230/month ($2,500 total): saves approximately $73,000 in interest and cuts the loan to roughly 25 years. Small, consistent amounts accumulate powerfully over 30 years.