A.: I believe your plan to retire by 60, while it may be desirable, is a tad ambitious. You didn't indicate whether any other pensions are involved, but with the numbers you've shown, I don't see how in the world you can retire by then. You can shoot for that, but don't be disappointed if you have to work a few more years, particularly since your Social Security cannot begin until you've reached at least age 62 under most circumstances.
I would be very much in favor of reducing your mortgage interest rate. My only caution is that you not build all or almost all of your retirement planning around the value of your house. As current history demonstrates — and as far too many people have learned firsthand – the value of real estate can drop quickly. Continue to contribute as much as you can to your 401(k).