Can I use my 401(k) to pay off my mortgage?

Answer

Using a 401(k) to pay off a mortgage is technically possible but often risky and expensive. Withdrawals before age 59½ usually incur income tax and potentially a 10% early withdrawal penalty, shrinking the funds available to apply to the loan. Cashing out retirement savings also reduces future growth, which may outweigh interest savings from eliminating the mortgage. Some plans allow loans against your balance, but these must be repaid on a set schedule and may become due if you leave your job. Consider modeling both options with a financial planner or calculator: compare projected 401(k) growth to mortgage interest to see which path is more beneficial.