Pay Your Mortgage Off Early
It makes no sense to withdraw from your 401K to pay your mortgage?
I am a man of 30 years with $ 70 000 in ten investment funds in a 401K and have a mortgage of $ 30 000 (1 of 2). 8.25% I am paying my mortgage and this last quarter lost 3% in my 401K, an anomaly. However, does it make sense pay an early withdrawal fee and pay my mortgage?
No, Premature withdrawals from a 401k are almost always a bad idea. Tax laws are an obstacle almost impossible to overcome. You would have to pay federal and state taxes plus a 10% penalty on withdrawal. The exact amount you will lose to taxes and penalties depends your individual situation, but is fairly certain that at least 25% of the amount withdrawn and quite possibly more than 40%. In addition to losing the benefits you would leaving money in your 401k. So we started with a 25% -40% loss in his retirement and trying to find a use for the money that makes it worthwhile. Interest of 8.25% savings on a mortgage not only compensate for the huge success it is having in advance. Circumstances may dictate a withdrawal, for example, is likely to lose your house to foreclosure. But if you are not obliged to withdraw from the 401k, which is almost certain to be better left alone.
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