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For homeowners frightened by debt, paying off a mortgage has taken on new urgency -- so much so that they're opting for higher monthly payments just to be debt-free sooner. But with interest rates at record lows and property values still in flux, that may not be as admirable a goal as it appears.

In the first quarter of 2011, three out of four homeowners who refinanced their mortgages paid additional money at closing in order to reduce their balance, according to Freddie Mac. Refinancers are also choosing shorter-term mortgages, which have higher monthly payments but promise debt freedom in 15 years as opposed to 30. Some 28% of borrowers who refinanced in February chose a 15-year fixed-rate loan, almost double the percentage that did so two years ago, according to CoreLogic, a data and analytics company that tracks the mortgage market.

For many, this is a move focused squarely on preparing for retirement, says Frank Nothaft, chief economist at Freddie Mac, not simply a move to take advantage of low rates or favorable terms. For those nearing retirement, getting rid of debt has become more important since the economy turned south. More than half of adults 50 to 64 have reduced what they owe on mortgages, credit cards and other debt since the recession, according to a 2010 survey by the Pew Research Center. And most don't plan to borrow more when the economy improves, says the report. "You have a lot of people who are more comfortable going into retirement with no mortgage debt," says Rebecca Hall, an Ameriprise financial adviser in Reston, Va.

With interest rates so low, refinancing can be a smart move. But paying down a mortgage ahead of schedule either by paying extra money at a refinancing, or by choosing a shorter-term loan may not be, experts say. Yes, it saves money on interest payments, but those savings may not be enough to offset what the money could have earned if invested in the markets, says Carol Friedhoff, a financial adviser in Columbus, Ohio. For example, she says, if a homeowner invested the $250 each month for 15 years and made a 7% average annual return, he would earn almost $80,000; if he applied the same amount to a 15-year mortgage, he would save roughly $57,000 in payments. Also, Friedhoff notes, mortgage interest is tax-deductible.

Paying off a mortgage early, at the expense of other, more liquid savings and investments, could also strangle cash flow, especially in retirement. Once a house is paid off, in order to access its value, the owner would have to sell, or get a line of credit or reverse mortgage to access the equity. That, says Bronxville, N.Y.-based financial adviser Steven Copeland, is unwieldy and expensive. "If you're short one month, you don't go out and refinance your house."

In some situations, refinancing to pay down debt quickly can make a lot of sense. Financial advisers recommend that home owners only consider pre-paying their mortgages if they already have an emergency fund of at least six months to a year in cash, have other retirement savings and plan to stay in the house for at least five to 10 years. It's also good to pay it off if the balance is small enough that the move won't derail other financial goals, says financial adviser Cheryl Holland in Columbia, S.C., who encourages clients to try to be mortgage-free by retirement.

But there's one factor that's difficult to measure -- the emotional one. Even if it doesn't make sense, consumers are more interested in paying off their mortgages than their much more expensive credit card debt, according to a survey released in June by Harris Interactive for market firm Dex One Corp. "It's a natural inclination," says Rob Siegmann with Financial Management Group in Cincinnati, Ohio, who has gotten more questions about repaying mortgages in the last 12 months than he's has in the last five years. "Investors think I want to pay off the house -- so it's mine."