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Should you pay off your mortgage early? I received two questions about this last week and it’s one that many people wonder about, whether they’re thinking of making extra payments each month or paying it off all at once with a lump sum payment. After all, who doesn’t look forward to the day when they don’t have to write that big check to the mortgage company every month? On the other hand, there might be better uses for your money, especially when mortgage rates are so low. No wonder the experts are split. Let’s take a look at some of the considerations in deciding whether it makes sense for you:

How much would you be saving on your mortgage?

The answer for most people is not a whole lot. That’s because interest rates are still near record lows and you can deduct that interest from your taxes. For example, if you have a 4% mortgage rate and you’re in the 25% tax bracket, your after-tax rate can really be about 3%.

If your rate is still high, you may want to consider refinancing instead. This calculator can help you determine how long it would take to recoup any costs you may pay in a refinance. But even if you’re stuck with a relatively high interest rate because your credit isn’t so great or your home is underwater or if you don’t benefit much from the tax deduction, you still need to compare your savings with the other following options available to you with that money.

Do you have sufficient savings for emergencies?

It won’t do you much good to pay down your mortgage if you may have trouble making the remaining mortgage payments should you lose your job down the road. A rule of thumb is to have between 3-12 months worth of necessary expenses somewhere safe and accessible like a savings account or money market fund. The exact amount can depend on how secure your household income is .

Some people think that paying down their mortgage can reduce their need for emergency savings since they can borrow against their home equity, but there are a couple of problems with this. First, as we’ve learned over the last few years, home equity can drop just like the stock market. Second, even if you have plenty of equity, your mortgage company can cancel your home equity line of credit at any time and they’re most likely to do it right when you most need the money. Think of home equity as a potential low cost source of credit for things like home improvements and college funding but not as your emergency fund.

Do you have high interest debt?

Your mortgage is generally considered to be “good debt” and there’s a reason for that. The average 30-yr fixed rate is a little over 4% and rates for 15-yr and ARM loans are even lower. Compare that to the average interest rate on a credit card with a balance, which is over ten percentage points higher. Other debt like payday loans can be much higher. If you have any of this “bad debt,” paying it off first should be a priority simply because it’s costing you so much more in interest.

Are you taking full advantage of your retirement accounts?

At the very minimum, you want to make sure you’re getting your employer’s full match before making extra mortgage payments. Otherwise, you’re leaving that free money on the table. Even beyond that, you’re still often better off contributing to your retirement plan because of the tax benefits and the potentially higher returns on your investments than what you’re probably saving on mortgage interest. A 2007 study by the Federal Reserve found that the 38% of U.S. households currently paying down their mortgage at the expense of retirement plan contributions are losing benefits of between 11% to 17% depending on their choice of investment. While the benefit would be smaller, this would apply to investing in stocks in taxable accounts too since their historical long-term annualized returns have averaged between 8-10%.