Last Updated: May 2026
TL;DR: At a 6.37 percent rate on a 30-year fixed mortgage, you pay nearly the cost of the home a second time in interest if you only make minimum payments. Adding one extra payment per year cuts about five years off the loan and saves tens of thousands in interest.
According to the Freddie Mac weekly mortgage survey, the 30-year fixed-rate mortgage averaged 6.37 percent in May 2026. The 15-year fixed averaged 5.55 percent. ARM rates averaged 5.8 percent. The Federal Reserve next meets June 16-17, with rate cuts expected but timing uncertain.
On a $400,000 loan at 6.37 percent for 30 years, your monthly principal and interest payment is approximately $2,497. Over the life of the loan you pay $899,000 total: $400,000 in principal and $499,000 in interest. That means you pay more in interest than the original loan amount.
This is the math most people never see when they sign the paperwork. The first five years of payments are mostly interest. It is not until year 19 of a 30-year loan that you start paying more principal than interest each month.
Same $400,000 loan at the 15-year rate of 5.55 percent: monthly payment is approximately $3,283. Over 15 years you pay $590,000 total: $400,000 in principal and $190,000 in interest. You save $309,000 in interest compared to the 30-year option.
The trade-off: a $786 higher monthly payment. For households that can absorb that, the 15-year is mathematically the better deal. For households that cannot, the 30-year with extra payments is the practical alternative.
One extra full payment per year on a 30-year mortgage at 6.37 percent shortens the loan by approximately 5 years and saves about $90,000 in interest. Two extra payments per year cuts roughly 8 to 9 years off. Paying $200 extra per month (about an extra payment per year, split into 12) achieves similar results.
Make sure any extra payment is applied to principal, not pre-paid into next month's payment. Most lenders allow this but you may need to explicitly mark the extra amount as principal-only.
With rates at 6.37 percent in 2026, refinancing makes sense if you have an existing loan at 7 percent or higher and plan to stay in the home long enough to recoup closing costs. The break-even on closing costs typically lands at 18 to 36 months. If you might sell within that window, refinancing usually does not pay off.
Use the Vanderflip mortgage calculator to see your exact monthly payment, total interest paid, and amortization schedule. The calculator also shows the impact of extra payments so you can model different payoff strategies before committing to one.
The math says pay off the mortgage faster. The behavioral side says many homeowners would do better investing extra payments in tax-advantaged retirement accounts instead, especially if their mortgage rate is below the long-term stock market return. The right answer depends on your tax bracket, your other debts, and how close you are to retirement. The simple rule: aggressively pay down any debt above 7 percent. Below that, the answer gets more nuanced.
This article is for informational purposes only and does not constitute professional financial, legal, or tax advice. Data is sourced from publicly available government reports and updated as conditions change. Consult a qualified licensed professional before making financial decisions.
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