Pay off mortgage now or wait until home sells?

Q: Over the next 12 to 18 months, my wife and I are planning to build or buy a new home in the $400,000-to-$500,000 price range. We have saved enough money to pay off the current mortgage ($130,000) on our home, which is worth approximately $220,000.

Should we pay the mortgage off now or wait until we sell it? Our mortgage interest rate is 5.25 percent and we're earning approximately 4 percent on our savings.

Mathematically it makes sense to pay off the mortgage, but I'm having a hard time thinking about emptying our savings account. Thanks in advance.

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