I am recently retired. Here's my take, which is from a bit of a different angle than many other responses.

Your question boils down to: Will investments in the stock market return more than the rate of interest on the mortgage? The math requires some guesses and assumptions which, I would guess, don't amount to a large difference in the final numbers given you are looking at the next 2 - 3 years and you are still quite a bit more than that from retirement.

You are on track to have the house paid off well before retirement, and that is a big deal. You never know when health, family, or employment will necessitate early retirement. From a security standpoint I don't think it is a decision factor in your situation. But in general I would lean towards paid off mortgage rather than more $$ in the 401k.

My guess is that the stock market is going to be overall not up for the next 3 years. There will be rallies and dips, but in general money you put into typical 401k funds are not going to be up. This would suggest mathematically you might be better off paying off the house. You do lose the tax deduction for your 401k contributions, which reduces the benefit of diverting to house payments.

The human factor is huge, and imho more important than the math unless the math is starkly divergent between options. It is too easy to not save. It is too easy when you make the last house payment to delay increasing the 401k because of some seemingly good reason.

As far as buying on the dip, I think most people make a fundamental psychological error. Let's imagine you're in a fund that was valued at $100/share a year ago, but now it is down to $70. We assume the market is going to go down to $60 or maybe a bit lower, and then start going up. In about 2 years it will be back to $70, and then it will continue back to $100 over the next year.

So that is a definite "V" shape, and we're on the downward leg. Remembering that nobody can say when the bottom is until well after the fact, many would suggest waiting until the up side and start buying in. You'd be happy to buy in at $60, $61, $62, etc on the up side. Heck, if you could be confident it was going up, you'd be happy to buy in at $50, $51, etc.

So there is no reason to not be happy to buy in today at $62, $61, $60, $51, $50, because you know it will be back to those levels in a year, and then a few years later it will be all the way back to $100. In other words, if you're happy buying when cheap, it shouldn't matter if it is up or down in the near term, assuming your timeline is long term. Since you are 10-15 years from retirement, buying cheap today is buying cheap, considering you don't need the money until much later.

It would be very different if you were trying to trade rather than invest, and very different if you were 64 instead of 54.

A paid off mortgage is a wonderful thing. My rate was 3%, but towards the end I was tripling or more my required payment. Why, because the freedom of no debt was better than the spread. And now, I can save like a wild man.