Pay mortgage with IRA

3 Answers

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  0 Votes 1  1

  Pinyo on Jun 02, 2010

  Kath, the answer depends on your mortgage interest rate and what you need in term of monthly expenses. If you’re paying high mortgage interest rate and paying it off improve your cash flow significantly, then it might be worthwhile.

  But I can’t really say for sure without knowing more.

  You may want to take a look at this question and see if the answers are helpful:  Should we pay off the entire mortgage?

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  +2 Votes 2  0

  JoeTaxpayer on Jun 02, 2010

  Kath – more important, what does the rest of your income look like? Married/single?

  First, understand what tax you will have to pay on any withdrawal. If you don’t understand how marginal rates work, that’s the first step, you need to first understand the cost of this vs the alternative options.

  If the mortgage rate is high, and can’t be refinanced, paying 10% or even 15% to get that money may not be the worst thing, but 25%, no. So once we know more details, one possibility is to retire this mortgage spread out over a few years. Where is the other 75%?

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  JustinGolden on Jun 02, 2010

  Also, if you have a life insurance policy that would allow your beneficiaries to pay off the mortgage it might be unnecessary to withdraw from your IRA.