If I pay 20,000 on a mortgage of 130,000.00, can I lower my monthly payments? I am about to lose my job and have to cash in my retirement fund because I have not found a job yet and am definitely going to take a 20,000 a year pay cut. I realize I will have to pay the 10% penalty and takes on the retirement account.

No. Even if you paid a lump sum you are still required to make the same monthly payments. You would have to refinance to change your monthly payments.

Are you talking about a 401(K) ACCOUNT?