After making payments on your home for so many years, you'll no doubt be excited when the date of the final payment approaches. You'll no longer have to write a check for the mortgage payment each month, and you'll be free to invest your income elsewhere.

You may even decide that it's worthwhile to withdraw a substantial lump sum to cover the remaining months or years of payments. Perhaps you've received a large inheritance, or maybe you have enough in your savings account to eliminate this debt.

Deciding whether to make such a large contribution to eliminate your mortgage debt will depend on your financial situation. For some homeowners, a lump sum payment is a good way to invest in your home and own it free and clear. For others, paying off your mortgage with a lump sum can prove detrimental to your budget.

Make sure you won't be penalized for paying off the mortgage early. If your loan comes with a prepayment penalty, you'll want to make sure this cost does not outweigh the benefit of finishing your mortgage payments ahead of time.

You'll also want to make sure you know the exact amount you need to pay to complete your loan. The financial services organization TIAA says the final payoff usually includes at least 10 extra days of interest and a date through which this sum is sufficient.

Be careful about which accounts you dip into to get the money for a lump sum payment. Lindsey Campbell, writing for the National Association of Realtors, says you'll pay substantial taxes on a major withdrawal from your 401(k) since these contributions have not been taxed yet. Jennie Phipps, writing for the financial site Bankrate, says taking a large amount of money out of this account will significantly reduce your retirement savings and the earnings they can achieve. You'll also be penalized if you are too young to withdraw money from this account for retirement.

If you're planning to take money from your savings account, make sure you have enough left over to cover emergencies. TIAA recommends having an emergency fund capable of covering three to six months of your regular expenses.

You should also consider whether the money you are planning to commit to the mortgage payoff could be better used elsewhere. If you have debt with a higher interest rate than your mortgage, addressing it first will save you more money in the long term. You could also decide to increase your retirement savings or contribute more money to a child's education fund.

Alternatively, you might want to invest these funds. Holly Johnson, writing for the financial site The Simple Dollar, says a diversified stock portfolio can often earn returns well above the interest rate on your mortgage.

Of course, there is some risk to investing instead of paying off your mortgage. You'll always have to pay interest on your mortgage, and paying off the loan will ensure that this debt is eliminated. By contrast, there's no guarantee that your investment in the stock market will be profitable. If there is a downturn after you invest, you could lose the money that would have been available to pay off your mortgage.

When you pay off your mortgage, you'll no longer be able to deduct the interest from your taxes. However, this benefit only applies if the interest exceeds the government's standard deduction. Phipps says the deduction will dwindle each year as you pay down your loan and owe less interest, and that less expensive homes may not be able to make this deduction from the outset.

One of the biggest advantages to paying off your mortgage with a lump sum is peace of mind. You'll still have to pay certain expenses, such as property taxes and homeowners insurance, but you'll no longer have to worry about the monthly mortgage payment. The money you save is yours to spend and can be used to invest, increase your retirement, or save up for a nice vacation.

There are other benefits to owning your home outright as well. These include the ability to more easily leave property to your heirs or have a larger amount of money available if you do a reverse mortgage.

Johnson says one way to balance the benefits and disadvantages of paying off your mortgage is to do it gradually rather than with one large payment. Determine how much money you need each month to meet your regular expenses and pay into other accounts, such as savings and retirement. The money that is left over can be added to your monthly payments, allowing you to gradually pay down the loan ahead of schedule.

Meeting with a financial advisor can let you know which options are the best fit for your situation. You can also meet with a tax advisor to see how paying off your mortgage will affect your taxes.