Situation where it's a good idea to pay off your hours?

[Pat Jackson]

To clarify, I'm not in this position, but wish I was!

Let's pretend someone financed a 150,000 house with an FHA loan. After 3 years they owe ~147,000 and the house has appreciated to 300,000. Now let's say this person inherits, makes, finds, etc 147,000 and they want to make the most out of it.

They could:

1. Keep paying their mortgage for another 27 years, or until they move and invest the 147,000 in real estate.
2. Pay off their mortgage and take out a HELOC. Some banks will loan up to 90% LTV. PenFed will loan up to 85% LTV and require interest only payments for 10 years. This person will now have a line of credit for $255,000 and won't be paying a mortgage.

Seems like a good idea to me.  Worth it?