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Homeowners' biggest monthly expense is usually their mortgage. But if they get far enough along in their loan term, they may find themselves in the enviable position of being able to pay it off in full early.

If they choose not to, it might mean they are taking the calculated gamble that investing the money will reap long-term returns that surpass the lender's interest.

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Imagine someone named Eduardo, 49, who has $300,000 stored in a savings account — much more than the average savings account balance for adults aged 35 to 44, according to financial data firm SoFi (1). He's also dutifully paid off his mortgage for many years, but still has $180,000 left on the loan.

With retirement just over a decade away, Eduardo is debating the best financial path ahead. Does he invest the cash or focus on paying off his mortgage? It depends on one key variable: the mortgage rate.

As of late June, the average mortgage rate for a 30-year loan stands at 6.4%, according to Freddie Mac (2). If Eduardo is paying off a mortgage with a high interest rate, then the calculation in front of him starts to change.

Assume Eduardo's mortgage rate is close to 6.3%. At that level, financial advisors say it becomes more attractive to wipe out mortgage payments, especially as retirement enters the picture.

LPL Financial devised (3) a similar scenario where a homeowner owing $300,000 with 20 years left on his mortgage loan term starts making an extra $400 payment each month, and pays off the mortgage six years early. They pointed out that the hypothetical homeowner saves $62,000 in overall interest paid to the bank from paying off the mortgage ahead of schedule.

Eliminating regular, fixed-mortgage payments will slash expenses considerably and ease up on sizable income needs. The extra money from getting away from mortgage payments can also become the foundation for an emergency fund.

Some studies (4) also suggest that there are psychological benefits to paying off a mortgage early, such as the emotional relief of having one less monthly payment to make. Just keep in mind that even after paying off a mortgage, homeowners still are required to pay property taxes.

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If Eduardo's mortgage rate was 4% or below, then investing can become the more lucrative route, especially if he has a stable income and little fear of losing his job.

Eduardo could put some or all of his savings into the stock market, depending on his risk tolerance. According to SoFi (5), a good annual return on investment is considered to be 7%. However, on average, the U.S. stock market sees returns of 10% each year. In either scenario, market returns will outpace his low mortgage rate.

If Eduardo invested $200,000 — or two-thirds of his savings — into a diversified portfolio with a 7% return over ten years, compounded annually, his investment would grow (6) to $393,430.

However, this is considered an optimistic scenario since it assumes little financial volatility in the stock market. The market can have bad years. The S&P 500, for example, plunged 19% (7) in 2022, due to high inflation, aggressive rate hikes by the Federal Reserve and geopolitical conflict.

Before Eduardo uses his entire $300,000 in savings to wipe out his mortgage, there are a few bigger financial questions worth considering. Paying off a mortgage early may feel like a guaranteed win — but it also means giving up the potential returns that money could have earned if it stayed invested in the market.

There's also the tax side of the equation. Mortgage interest may be deductible for some homeowners, especially those in higher tax brackets who itemize deductions. By eliminating the mortgage entirely, Eduardo could lose that benefit and potentially increase his taxable income in the years ahead.

But the right answer depends on the full picture — including Eduardo's retirement plans, emergency savings, investment mix, family situation, income and future goals.

If you're sitting on a large pile of cash and thinking about using it to pay off your mortgage early, it may be worth getting a second opinion before making such a major move.

For homeowners with portfolios of $250,000 or more, finding a qualified professional can be easier than ever through WiserAdvisor.

Just answer a few questions about your savings, retirement timeline and overall investment portfolio, and WiserAdvisor will review its network to match you — for free — with up to three vetted, reputable advisors aligned to your specific needs.

WiserAdvisor does the heavy lifting when vetting financial advisors on its roster. Each advisor is screened based on their years of experience, their SEC/FINRA registration and records, and compensation criteria.

Just schedule a no-obligation consultation with your matches to find the best fit for your long-term goals.

Note: WiserAdvisor is a matching service and does not provide financial advice directly. All matched advisors are third parties, and specific financial results are not guaranteed.

Before putting a large chunk of savings toward your mortgage balance, it may be worth exploring your options first. If rates have changed since you originally took out your loan, refinancing can allow you to secure a better deal, lower your monthly payment, or adjust your loan terms.

A lower mortgage rate could help you keep more cash available while still making progress toward paying down your loan.

You can compare refinancing rates offered by vetted lenders near you through Mortgage Research Center (MRC). You can customize searches to your needs and get estimates on your new mortgage payments if you choose to refinance.

Once you make a selection, you can set up a free, no-obligation consultation to determine whether you want to proceed.

Paying off your mortgage early doesn't always require a huge lump-sum payment. Sometimes, small savings across your monthly housing expenses can free up enough cash to make extra payments over time.

For example, those who manage to reduce recurring costs, such as insurance, may be able to redirect those savings toward their mortgage. Making just one extra mortgage payment each year can shorten your loan term and reduce the total interest you pay over the life of the loan.

You can compare offers from leading home insurance providers near you for free through OfficialHomeInsurance.com.

Simply enter some basic information about yourself and the type of home you own, and OfficialHomeInsurance will browse through their database of over 200 insurers and display the lowest quotes for you in just two minutes.

By comparing your options and selecting the best rate available, you could save an average of $482 per year on premiums. It's also important to remember that, in most cases, you don't need to wait for your plan to be up for renewal — just watch out for any early cancellation fees.

There's flexibility with investing since it provides easy access to cash. If you're hit with an unexpected expense, selling investments can create cash quickly.

But timing matters. Selling during a market downturn could force you to lock in losses, while selling during a strong market could trigger taxes on your gains.

For homeowners who want access to their home equity without giving up flexibility, a HELOC may be worth considering.

You can tap into your home equity with a HELOC from AmeriSave and access your full funds right at closing.

You can choose a draw period that fits your life — three, five, or 10 years — along with 20- or 30-year terms to suit your budget. And with a 10-year interest-only option, you can keep monthly payments manageable while you plan ahead.

It's essentially a flexible credit line secured by your home, delivered through a mostly online application process.

— With files from Joseph Zeballos-Roig

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We rely only on vetted sources and credible third-party reporting. For details, see our ethics and guidelines.

SoFi (1), (5), (7); Freddie Mac (2); LPL Financial (3); Center for Retirement Research (4); Investor.gov (6); Consumer Financial Protection Bure

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.