Dear Liz: We’re refinancing our mortgage and home equity loan and will be paying about $200 less per month. Would we be better off applying this extra money toward the mortgage so we can pay it off in less than 15 years? Or would it be better to put it into savings or invest it?

Answer: Most people have better things to do with their money than pay off a low-rate, tax-deductible debt such as a mortgage — especially if you’re already on the road to paying it off in 15 years.

You should first make sure you’re on track with your retirement plan. If you’re not already getting the full company match from your 401(k) or 403(b), that extra $200 could win you an instant 25% to 100% return, depending on the generosity of the company match.

Even if your plan doesn’t have a match, you could get a tax deduction on your retirement contributions that you won’t get paying down the principal on your mortgage. Plus, your money is likely to earn greater returns over time than what you’d net by paying off your loan early.

If you’re maxed out on saving in your workplace plan, consider contributing to a Roth IRA. If you’re on track for retirement, paying off other debt and bolstering your emergency fund would be the next smart moves. Once that’s done, review your insurance coverage to make sure you’re adequately protected on the life, disability and long-term-care fronts.

Only after you’ve got all your financial bases covered should you consider accelerating your mortgage payments.Don

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