[throwaway2037]

   you can just pay off the loan faster

In the US mortgage market, this is called curtailment. For example, if you make one extra payment per year, you will shorten a 30 year fixed rate mortgage by about 4.5 years. Also, for most US mortgages, you are allowed to prepay 100% with no penalty. This allows for refinancing.

What I do not understand: Why don't more countries do this? Have large gov't financing companies that guarantee certain fixed rate mortgages? Overall, it is a huge win for the middle class home owner in the US.

[thelastgallon]

>For example, if you make one extra payment per year, you will shorten a 30 year fixed rate mortgage by about 4.5 years.

This doesn't sound right. If I make 5 extra payments (either in 1 year or over 4 years), the mortgage will be shortened by 5 x 4.5 years = 22 years. I'm sure everyone would do this, 5 extra payments is super easy!

[throwaway2037]

You misunderstood my original post. One extra payment per years means 13 mortgage payments, instead of 12. (Almost all US mortgages require monthly payments.) To be clear: This extra payment is strictly optional, but it used to demonstrate how curtailment can meaningfully reduce the life of your loan and the amount of interest paid.