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Posted: 1/27/2006 7:24:59 AM EDT
OK I’m at the point where my annual mortgage interest payment is so low that it is lower than my standard deduction, i.e. I’m not getting it as a noticeable tax write off anymore. I have sufficient money in a 401k to pay off the mortgage. The 401k is mostly safe long term investments
Should I take a loan from the 401k to pay off the mortgage or continue to pay off the mortgage?
Link Posted: 1/28/2006 5:17:08 AM EDT
Link Posted: 1/28/2006 5:23:30 AM EDT
Short answer... Don't do that.
Link Posted: 1/28/2006 5:25:57 AM EDT
If you can afford your mortgage as is, dont depleat your 401k jus to pay it off. If you lost your job or got injured you may NEED that 401k later on for emergencies.
Link Posted: 1/28/2006 5:26:20 AM EDT
Do you need to take a home equity line of credit? If you take out enough then you can claim it again on your taxes. If not you could sell the home which you would lose the asset and not to mention pay taxes on your capital gains unless you put it in another home.

You could also rent and buy a new home.

I am sure the financial gurus will chime in and correct me if I am wrong.

Link Posted: 1/28/2006 5:28:32 AM EDT

Originally Posted By Fourays2:
Should I take a loan from the 401k to pay off the mortgage--NO or continue to pay off the mortgage--YES?

Link Posted: 1/28/2006 5:41:22 AM EDT
How much is your mortgage interest rate?

How much is your 401k returning?
Link Posted: 1/28/2006 5:46:41 AM EDT
I don't think that is one of cases in which you can draw on a 401k penalty-free, is it? Does this count as a "hardship?"

Even is you can withdraw under hardship rules you'll still pay a 10% penalty on top of the regular income tax.
Link Posted: 1/28/2006 5:50:14 AM EDT
As much as I hate debt, I wouldn't liquidate any 401k money to pay off a controllable mortgage.
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