[stlouis20]

I am 48 years old I owe $144,000 on my house with a 30 year mortgage fixed ,would it be worth it to take my 401 k money and pay off my house? Can I do this with a Hardship withdrawl.

[ebaines]

No - paying your mortgage does not qualify as a hardship withdrawal - unless you are about to be evicted for inability to pay.

Assuming this isn't the case, it is not worthwhile paying down your mortgage balance with 401(k) funds, for several reasons:

1. You will have to pay ordinary income taxes plus a 10% penalty on the money you take out of your 401(k). Depending on your tax bracket and state income tax situation, this can add up to about a 50% take away.
2. The interest on your mortgage is tax deductible, so uncle sam is giving you a deduction that would be reduced as you pay down the mortgage.
3. Money in your 401(k) grows tax-differed until you withdraw it - so your investments there should compound and grow faster than similar investments you might make in a non tax-sheltered account. In fact, if you have a nice diversified mix of stocks and bonds, you are probably averaging a 10% return or better in your 401(k), whereas the interest rate you are paying on the mortgage is probably 5 or 6%, and actually after you figure the tax deduction in it's probably only costing you 4% or so. Doesn't make much sense to trade a 10% return for a 4% one.

[Fr_Chuck]

No it is about the worst thing you can do. Next are you out of work, is the house about to go into foreclosure? What is the hardship ?

But as noted you will have to pay a pentalty and taxes on the money you draw out, so they are ging to get as ntoed at least 35 percent before you get anything, also just the 10 percent is more than the interest you should be paying, plus the interest you lose from your investment.

If you want to pay it off faster, you may pay less into your 401K for a few years.