Here are some thoughts from a Yahoo Finance piece comparing paying off your mortgage versus investing instead:
As I see it, if money is even the slightest bit tight, hold onto it and pay off the mortgage month by month. There's nothing magically good about having a paid-off mortgage, but there's something seriously bad about not having ready liquid assets even if your home is paid for.
In short, unless you're sitting on surplus cash, I see no urgent reason to pay down or pay off your mortgage in a hurry.
As a "pay off your mortgage" advocate, here's my response:
1. I agree that you shouldn't put all your available cash into paying off your mortgage. You need an emergency fund and need to be saving for retirement (at least enough to get the full employer match) as well. If you can do these two things and still have cash left over, then paying off your mortgage is a viable alternative. This is the situation I was in when I paid off mine.
2. There's a big difference between theory and reality. In theory, paying a mortgage month-to-month and investing the rest is a great idea. The numbers will certainly support it as the better alternative. But how many people actually go ahead with the "plan" -- to actually save? I've seen many start to save for a few months or even a couple years, only then to decide that they "need" a big-screen TV, new boat, etc. and blow it all. So much for the "plan." Reality is different than theory -- especially in personal finances.
3. Everyone generally discounts the built-in insurance that comes with having a mortgage being paid off. For instance, two people lose their jobs. One has his home paid off and the other doesn't. Who's more worried? Yeah, if the second guy saved/invested like he should have, MAYBE he's less worried. But it's likely he hasn't exactly stuck to the plan (re-read point #2), so the guy with the home paid off is probably more secure.
4. What's the "I don't owe anything to anyone" feeling worth? Most people don't know because they owe something to someone. As a person who's had no debt for ten years now, I can tell you it is certainly a nice feeling. You hear the term "debt freedom" (or something like it) thrown around all over the place, but you don't really know that there is a true sense of freedom until you become debt free. And that's a feeling money can't buy.
5. My wife wants us to be debt free, so we are. ;-)