For most American homeowners with mortgages, the mortgage term can sure feel like forever. With home purchase prices at $412,300 for the second quarter of 2024, it’s easy to assume that the average mortgage balance is quite high, but you may be surprised at the number.

Knowing how you compare to other homeowners can help you make big financial decisions, including whether to downsize or spend a little bit more to buy your dream home. Of course, all of this is also heavily influenced by mortgage rates, as well.

What’s the average American mortgage balance?

Let’s get right to it, shall we? According to Experian’s reporting, the average American carried $244,498 in mortgage debt as of Q3 2023 (this is the most recent data). It’s up quite a lot from pre-pandemic balances, which were $199,990 in Q3 2018 and $204,315 in Q3 2019.

This makes sense because the cost of housing shot up dramatically during and after the pandemic. Most people have to borrow some of their housing costs, so with that goes higher mortgage balances.

Those with the highest balances in 2023 were millennials, at $299,869, and those with the lowest were the silent generation, at just $142,644.

Mortgage debt managed

Having mortgage debt is not the worst thing in the world. It’s generally considered a positive type of debt, both for the credit boost it gives and for the value it provides. Unlike credit cards, for example, the debt from a mortgage is generally on an asset that’s increasing in value and provides a hedge against housing cost inflation.

However, it can also be difficult to really do what you want with your life if you’re juggling a large debt burden, positive or not. Managing that mortgage debt and making it more friendly to your lifestyle is the key here. You have a couple of options.

Refinancing

Refinancing can be a tricky decision to make when you’re trying to manage your mortgage debt. On one hand, you’ve got a shiny new loan with a lower payment (you did get a lower payment, right?), but on the other, you could end up paying more in interest by refinancing at the wrong time or under the wrong circumstances.

In general, you’ll do best if you refinance early in your mortgage, since you pay most of the interest in the first decade. For example, if you borrow $300,000 at 6.5% interest on a 30-year fixed rate mortgage, you’ll pay a total of $382,633 in interest — just over half of which, $196,869 — is paid in the first decade.

So, the longer you wait for a lower rate, the less likely that a refinance makes sense, since you’re taking much bigger monthly bites out of your principal by year 10 and are paying much less interest.

If instead of making your payment smaller, you want to make your term shorter, you can talk to a mortgage lender about refinancing into a shorter-term mortgage — or you can just do it yourself.

Most of the time, mortgages don’t have a prepayment penalty, so you can make as many extra principal payments as you want in a year, and that’ll help reduce the length of your mortgage without you having to spend extra for a refinance or reset your interest clock.

It’s pretty incredible what just one extra mortgage payment a year can do to a 30-year fixed-rate mortgage. If we use the example above, your $300K loan at 6.5% has a principal and interest payment of $1,896. If you make 13 payments of $1,896 yearly, you’ll save yourself $90,545 in interest over 30 years, and cut your payoff term down to 289 months, or just a little bit over 24 years.

If you make two extra payments a year, $3,792, you’ll shorten your term to 242 months, or just over 20 years. You’ll also save $144,278 in interest.

It’s OK if you can’t always make an extra payment, or if you can only pay a little extra every month. Even paying an extra $100 a month with each of your mortgage payments will cut four years off your repayment time and save you $60,994 in interest.

Your mortgage balance and you

Although it’s nice to know where you are in comparison to other Americans when it comes to mortgage debt, the truth is that your life is your own, and sometimes you need the house you need. It could be in a more expensive place than the average home, or possibly you need a bigger house for a multi-generational family or a home-based business.

Whatever your mortgage balance is, don’t focus so much on the number — instead, consider how it fits into your long-term financial plans.