Don't take this the wrong way, I am not trying to be critical, but....why would you want to pay it off, or accelerate payments even?
Maybe you need to talk to a financial planner that can look over your entire situation.
But things to consider:
1. Interest is tax deductible. So your effective interest rate is much less than 3.75%. What other deductibles will you have?
2. Retiring at 60? I assume you are still in good health. So you can expect to live quite a while in retirement. You should NOT be planning to only get 2-3% returns. At least some stock exposure should enable you to double that fairly easily.
3. 3.75% !! That's a historically low rate! No where to go but up from there. If you later want to get a loan for a big expense (assuming you could still qualify), you will be regretting giving up that 3.75%.
The previous suggestions are also very valid. Except again, I would urge you to consider just keeping your payments as is.
I have a very similar situation to yours. Of course similar is not the same, hence suggesting the visit to a financial planner. But I am retiring end of this year, I refinanced my house in 2012 for 30 yrs (payoff in 2042), at 3.875%. Will I live long enough to pay it off? Who knows, but what does it matter? I get to keep a loan for under 4%, guaranteed for 24 more years, and I don't ever expect we will see these low rates again in my lifetime. I plan to continue to invest my TSP and IRA accounts at higher than 4% per year, and pocket the difference for travel, gifts to grandkids, etc. And most likely also leave a pretty good legacy for my heirs.
So, consider Scenario #3, leave mortgage payments as is.
Good Luck in your retirement!!
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