Generally speaking, when you make mortgage payments in advance, you can do one of two things. You can either apply extra payments to the principal, which will reduce interest costs over the life of the loan or you can apply extra payments against future payments which could shorten the life of the loan but not reduce the interest costs. Before you make extra payments, always make sure your loan doesn’t have an early payoff penalty. Keep in mind that every bank is different and before deciding to make extra payments determine what your specific bank’s rules are and how they affect your particular circumstances.