You are better off after 59.5 because you aren't getting an immediate 10% haircut. That said, paying off the mortgage or getting a new one will depend on how much interest you are paying versus what you can get investing the money.
Keep in mind that the bulk of the interest on a mortage is paid at the beginning. When you are toward the end of the mortgage, very little interest savings are realized by paying it off. It is a good feeling though to write a check and be done with it.
When using a mortgage to buy a home, you are still paying rent. Only you are renting money. And the rent is tax deductable.
Thanks for the response . In other words there is no simple answer ,but not out of the question to pay off mortgage from 401k after 59.5 as it would be before 59.5?
I am a person who absolutely abhors debt(1st mortgage closing made me nauseous & had to be reassured /consoled by my girlfriend at the time).. I hate debt.
So the peace of mind being 'mortgage free' would be a good thing for me ,but may not necessarily be worth it just to free up $7-800/ month.