If I understand your question, you want to ask that whether you should pay off the mortgage (your house) in full with the cash at hand, my answer is that you should not hesitate in doing so. Thereby you are freeing yourself from the burden of interest. However, if you did not save enough to pay the entire mortgage, and you are able to pay only as they become due, in that situation, you may give the amount you have saved after your reasonable expenses in charity; the first thing is zakah and then comes other voluntary charities.
Buying a home by the mortgage is allowed as long as you have no other means of raising money to buy a modest house. This is the fatwa of Shaikh Qaradawi and the late Mustafa al-Zarqa; this is also the view endorsed by the European Council of Jurists. You may peruse their fatwa here: http://globalwebpost.com/farooqm/study_res/i_econ_fin/ecfr-fatwa_mortgage.htm