To prepay or not to prepay your mortgage? In one corner are the folks who tout the relief offered by unloading your biggest monthly debt payment. In the other are those who say your money is better put into higher-paying investments. Whatever camp you're in, don't start prepaying your mortgage until you've taken care of these six priorities.

Six Considerations Before Prepaying Your Mortgage

Prepaying your mortgage is a financial strategy that can save you a ton in interest over the life of a home loan. Moreover, the psychological benefits are substantial--if you have a burning desire to be debt-free, paying off your mortgage early may be the right choice for you.

However, keep in mind that prepaying your mortgage has its big drawbacks. One of the biggest downsides to putting extra money into your mortgage is that it can be expensive and difficult to get the prepaid money back if you later need it.

While it may feel good to put extra payments toward your principal, don't compromise your financial security by prepaying your mortgage without first considering other priorities. If you're thinking of putting extra payments toward your mortgage balance, make sure you've crossed these six items off your list.

What to do before prepaying your mortgage

1. Pay off more expensive debt. Your mortgage might be costing you somewhere in the neighborhood of 5 or 6 percent interest. Your credit card interest rate may be three times that--or more. Never prepay lower interest debt like a mortgage if you are carrying balances at higher rates elsewhere.

2. Max out retirement plans. The preferential tax treatment that you get with qualified retirement accounts, plus the advantages of matching funds (if your employer provides them), make fully funding these accounts a higher priority than prepaying your mortgage.

This is a common error: the Federal Reserve says that approximately 38 percent of homeowners making extra payments on their mortgage balances are making the wrong decision and insufficiently funding their retirement accounts as a result.

3. Create an emergency fund. Almost every financial planner advises having an emergency fund. Your emergency fund should have enough cash to pay for a minimum of three months of expenses (if yourincome is very stable) to as many as 12 (if you are self-employed, on commission or work in a troubled industry).

At least some portion of your emergency funds should be highly liquid and safe. If you can't cash them in without stiff penalties--for instance, if the money is all in long-term CDs with high early withdrawal penalties--or they might drop in value when you need to access the money, those emergency funds won't go as far as you need them to.

4. Review your taxes deductions. If the only thing that allows you to itemize the deductions on your federal tax return is your mortgage, you aren't really benefiting from the mortgage interest deduction. Keep in mind that you have to spend a dollar to get 25 cents back if you're in the 25 percent federal tax bracket. Taking the standard deduction and not having the expense of mortgage interest may put you ahead.

Try consulting a tax pro or running hypothetical scenarios through tax preparation software to see if retiring your mortgage early makes sense for you.

5. Get adequate insurance protection. The biggest emergency fund in the world won't be enough if you experience a medical catastrophe. Bankruptcy attorneys list medical events as a top cause of bankruptcy and foreclosure. Protect yourself and your family with health, disability and life insurance coverage.

6. Double-check your home's value. If your mortgage balance exceeds the value of your home, don't make extra payments to bring down that balance. Why? First, if you experience a financial hardship, you are a lot less likely to get help from your mortgage lender if it can foreclose and get its money back. You lose any leverage you may have by getting your home in the black. Second, the chances of experiencing financial difficulty increase if you're in an area hit with foreclosures, declining property values and unemployment. You won't be able to get those prepayments back if you end up losing your home, and you'll likely need money to start over.

Refinance mortgage lenders provide an alternative

What can you do if you still want to prepay your mortgage but shouldn't be sending extra money to your lender each month?

Refinance mortgage rates are low enough that you may be able to substantially prepay your mortgage without committing extra funds. Simply shop for the best mortgage rate you can get with refinance mortgage lenders and switch to a home loan with a lower monthly payment--but continue making the same payment each month that you have been making.

For even faster mortgage reduction, consider a hybrid adjustable rate mortgage. Refinance mortgage lenders offer fixed terms for three, five, seven or 10 years at even lower interest rates than for a 30-year fixed-rate mortgage. A good loan officer can help you create your ideal plan for mortgage prepayment.