Lump sum from 401K to pay off mortgage
My wife may be losing her job and the prospects for another are rather bleak in this economy. She currently has about $150,000 in a 401k. We currently owe $52,000 on a $350,000 home with 4.5 more years at $1,125 per month. Does it make any sense to take a lump sum payout as a hardship and pay off the mortgage. The mortgage payment of $1,125 per month is $825 on principle and $300 on interest. I would be saving about $300 per month in interest for the next couple of years by paying it off. Aside from the penalty I'd be paying on the lump sum, the rest of the money is really going right back into the other pocket in equity as the debt is eliminated on the other side of the balance sheet. Anyone have advice?