This is an age old argument and a nice piece exists on moneywatch.com which covers the idea and how to think about it. Below the video are my comments:
Here are my comments from the Moneywatch Web Site:"I am shocked you did not cover the "guarantee" factor of paying off your mortgage. You cite there may be "better uses for your money" and I think you are right when you discuss tax deferred accounts. However, another thing people should think of is if they pay off a 6% home mortgage (example) and they are in the 28% tax bracket, they are getting a GUARANTEED 4.3% return on their money. So, the question they have to ask themselves is what is the risk premium they are going to get over 4.3%. Yes, they might get 6% but that is not GUARANTEED.
Further, I think people need to look at the equity they have versus what they will need to purchase a retirement home. A lot of people will downsize. So, for example, if you plan on buying a $250k home in Florida at retirement and you currently own a home with $250K in equity, the fact that you also have a $250K mortgage does not matter much. As you retire, you will sell that home, pocket $250K, buy your new one IN CASH, and you will be debt free at retirement.
Now, you have to be HONEST with yourself about how much equity you truly have (accept the fact that your home has dropped a lot in value) but if the numbers are as I stated above, even though you have a $250K mortgage, you have essentially "paid it off".
The key goal, IMHO, is to retire debt free. To do that, you do not need to pay off a huge mortgage assuming you will downsize."
You Can Resist Even if You are In The Military!
