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Mortgage or not?
I often say "don't let the tax tail wag the investing dog." I need to change that phrase a bit to "don't let the tax tail wag the mortgage dog." Getting a tax deduction on a 4% mortgage basically results (assuming you already itemize) in an effective 3% rate mortgage. The best way to avoid tax is save pretax in a 401(k), IRA, or both.  You are 57, and been through a tough time. You're helping your daughter through college, which is an expense, and admirable kindness to her. But all this means you won't start saving $10K/yr until age 59. The last thing I'd do is buy a bigger home and take on a mortgage. Unless you told me the house you want has an in-law apartment that will bring in a high rent, or can be used to rent rooms and be a money maker, I'd not do this.  No matter how small the mortgage, your property tax bill will go up, and there would be a mortgage to pay. Even a tiny mortgage payment, $400, is nearly half that $10K potential annual savings plan.  Your income is now excellent. Can your wife do anything to get hers to a higher level? In your situation, I'd save every cent I can.