But 3-6 months of living expenses will be much smaller with the house paid off. If you forget to correct for that you’ll wait longer than necessary to make the leap. The other thing though, is that you’re paying so little interest in the last year or so of the loan, there’s hardly any gain in raiding the EF and paying it off earlier. I think the last year of my loan I’m going to pay $200 or something in interest the entire year.
A good point, but if you can afford to do it without entirely draining the EF, I'd pay off the mortgage, put the amount I was contributing to the mortgage back into the EF, and pay myself that $200 in interest. I did a similar thing the last time I had a car payment. When I paid the car off in 2000, I just kept putting the car payment into a savings account every month. In 2009, when I got ready to buy another car, I paid cash, and still had a decent amount in the savings account.