Suze Orman shares wealth-building strategy for homeowners | Official Website of Louis Velazquez, entrepreneur, finance guy and tech innovator

Paying off your mortgage early can be a wise move for building wealth and reaching financial freedom. But it’s only a good strategy for certain people.

I’ve encountered the question “Should I pay off my mortgage early or invest?” many times over the years — both professionally in my time reporting on mortgages and investing and personally as a homeowner when I have extra funds.

On a recent episode of her podcast “Women & Money (And Everyone Smart Enough To Listen),” best-selling author Suze Orman and her wife/co-host, KT, received a question from listener Michelle, age 36. Michelle used a VA loan to buy a home in 2020 — with a 30-year fixed mortgage interest rate of only 2.25%. She asked Orman if she should pay off her mortgage early.

Michelle had been putting an extra $100 per month toward her mortgage principal but was still disheartened that it was taking so long for the balance to go down. She expressed that she was in a comfortable financial position and was considering putting $20,000 extra toward her mortgage each year.

Because her rate was so low, Michelle expressed that she knew doing something else with the money might make more financial sense. She was still unsure, though.

“I feel like you cannot put a price on being free from debt and owning your home outright,” Michelle wrote.

After breaking down the math and various paths Michelle could take, Orman said, “I don’t think I would pay it off right here and right now. I would give myself more time, especially at this interest rate.”

Suze Orman focuses on the mortgage rate

When asking yourself whether you should pay off your mortgage early or invest, it’s crucial to think about the rate of return.

The S&P 500 stock market index’s average rate of return has been roughly 10% since it began in 1957, according to Fidelity Investments. If your mortgage interest rate is significantly lower than 10%, investing in the stock market will probably earn you more money than paying off your mortgage early would save you.

Orman’s listener had a much lower rate than 10%. Many people were able to lock in mortgage rates below 3% in the peak of the Covid pandemic, and the type of loan Michelle had — a VA loan — often comes with even lower rates.

In fact, Realtor.com calculations found that as of Q3 2025, 20% of American homeowners’ mortgage rates were 3% or lower. A total of 68.6% people had mortgages with rates of 5% or lower.

Based on these numbers, it would make sense for most homeowners to invest extra funds rather than use that money to pay off their mortgages early.

If your rate is well over 6%, you may want to talk with your financial advisor about the best option. Aggressively paying down your home loan could end up being the better fit, or you might be able to refinance into a lower mortgage rate.

Orman advises homeowner to reassess after several years

Orman’s listener was only 36 years old. The fact that she was young affected Orman’s advice to invest rather than pay down the mortgage for two reasons.

First, because Michelle was young, she might not be living in her forever home. There was plenty of time for life circumstances to change that would cause her to move, which would make it less beneficial to pay down the principal.

Second, if she started investing $20,000 per year in the stock market now, her investments would have decades to grow.

More on mortgages and mortgage rates:

Michelle’s remaining principal was $250,000. Orman explained that if she started paying an extra $20,000 toward the principal, she would pay off her mortgage in just eight years. But if she invested $20,000 for those eight years instead, she would earn roughly $200,000 or $250,000.

So, the two options would come out even after eight years. But Orman offered a third option.

“However, if you just invest $20,000 a year for the next eight years … you continue to put the $100 a month more toward your mortgage, because it’s at such a low interest rate, in eight years, you would probably only owe $180,000 on that mortgage,” Orman said.

This way, the listener would pay a little extra toward her mortgage and make larger investments for eight years.

The median amount of time Americans live in their houses before selling is 11 years, according to the National Association of Realtors. Michelle had already lived in her house for six years, and after eight more, Orman recommended reevaluating the situation. Would she feel like this was her forever home? If so, she might decide to start paying down her mortgage faster.

Orman pointed out that Michelle could even use the earnings from her investments over the last eight years to pay off her mortgage loan.

Paying down mortgage vs. investing: Decision depends on your stage in life

Orman’s suggestion to invest rather than pay off your mortgage early applies to many Americans, but the details were tailored to Michelle’s situation. The best strategy — paying down your mortgage, investing, or splitting your funds between the two — depends on your phase in life.

How old are you? You may want to focus on investing if you’re younger, as Orman suggested to Michelle, so your investments have decades to gain value. But if you’re older, have already invested a solid amount of money, and live in your forever home, then focusing on your mortgage could make more sense.
How long do you plan to stay in the home? The longer you expect to live in this house, the more sense it makes to pay down your principal.
What’s your mortgage interest rate? If your rate is under 6%, you’ll like earn more by investing than by paying off your home loan early. If your rate is a little higher and you aren’t sure about the math, consider talking to a financial advisor about your specific situation.