I think one thing we can agree on is everybody will not agree what is the correct "answer"
...
And that's OK. If we knew what the future would hold, it would make it a bit easier.
As for us? We built our current (retirement) home back in '94. When we applied for the note/mortgage, the bank we went through asked us why did we not just dip into our retirement funds and pay cash?
The answer was that we could afford to make the payments without a problem since we were both employed and had the spare cash to take on a new note. The note rate at that time was 6.875% (our previous two homes were both at 10%, for those of you who think today's rates are high
).
For those of you around in the mid-late 90's, you do remember the tech boom and the folks that were scraping up every bit of cash to invest in the market. OTOH, we took our extra cash and put it on the principal to reduce the loan period, paying off the 30-year term in just over 5 years, in late 1999.
At that time, our primary goal (of being note/mortgage free in preperation for retirement) was met, and we took the amount of the monthly payment plus the extra we were paying and put it into the market.
As most know, the period of 2000-02 was not a good time to be in the market, however it was a great time to invest new money into the market, as we were doing. While we were being quite contarian at the time (my co-workers though we were fools, even though some of them had HELLOC's to allow them to invest more at the time). Why didn't we put our money to work in the market, which was the general consensus?
Let's just say we did quite well, and it allowed us to retire a few years earlier than originally planned (fools that we were).
As I said, you don't know the future but in some cases it works out much better than planned.
BTW, we have no plans to use the value of our current home for anything other than possibly purchase another retirement home in the future (we're currently looking at possibilities). It's not part of our investment net worth (to be used to satisfy current income), but it is part of our gross estate net worth, to be used for our terminal bequests.
Sometimes, you can't beat dumb luck...