May 28, 2025
Paying off your FHA mortgage loan early has financial advantages including saving money on interest that you would have paid if the loan had gone its full 15-year or 30-year term. FHA loans have the advantage of not allowing your participating lender to charge a penalty for early payoff of the mortgage, making it more cost effective to consider.
What do you need to know about early payoff? Take our quiz below to see how prepared you are to begin.
True or False: Reputable financial advisors universally recommend that every homeowner should prioritize paying off their mortgage early over all other financial goals, including retirement savings and emergency funds.
Answer: False.
The decision to pay off a mortgage early is a personal one that depends on a wide range of individual factors. These include the mortgage’s interest rate, potential returns on other investments, the individual’s tax situation, liquidity needs, risk tolerance, existing emergency funds, and overall long-term financial goals. It is not a universally recommended priority over all else. Some financial advisors contradict this advice, but their opinions are not shared by reputable, experienced professionals.
True or False: Owning a home outright by paying off the mortgage as early as possible offers no particular advantage in financial security during unforeseen circumstances, such as a sudden loss of income.
Answer: False.
Having a paid-off home provides financial security. Eliminating a major fixed monthly expense like a mortgage payment makes it easier to manage periods of reduced income or other financial hardships without the immediate threat of foreclosure.
True or False: A bi-weekly mortgage payment plan involves making your standard monthly mortgage payment every two weeks, doubling your payments.
Answer: False.
A true bi-weekly mortgage payment plan involves planning to pay half of your monthly mortgage payment, once every 14 days. Since there are 52 weeks in a year, this results in 26 half-payments, equivalent to 13 full monthly payments1 annually.
True or False: The main advantage of a bi-weekly mortgage payment system is simply the convenience of aligning payments with bi-weekly paychecks.
Answer: False.
The advantage of a bi-weekly payment system is that you make one extra full monthly payment each year. This additional payment is typically applied directly to the principal, accelerating the loan payoff and reducing the total interest paid.
True or False: Making just one additional mortgage payment towards the principal each year is unlikely to have any significant impact on the term of a 30-year loan.
Answer: False.
Consistently making one extra mortgage payment per year can substantially shorten the term of a 30-year loan by several years and result in considerable savings on total interest paid.
True or False: Applying a large, one-time lump-sum payment (such as from an inheritance or a bonus) towards your mortgage principal will only marginally affect your loan payoff timeline.
Answer: False.
Large, one-time principal payments can reduce the outstanding loan balance. This can reduce the amount of future interest that accrues and may substantially shorten the loan’s term, leading to a much faster payoff.
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Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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