| You will want to be very careful when considering | | | | The reason why I said that you have to be |
| using your 401k or IRA to pay up your mortgage. | | | | careful in the beginning is because taking money |
| It still can be a good solution to avoiding | | | | out of your 401k can be a bad solution if you are |
| foreclosure. One of the main advantages of using | | | | getting close to your retirement. You will have to |
| an IRA or 401k is you have up to 60 months to | | | | pay it back with interest if you lose your job and |
| pay it back if you take a loan from the account, | | | | default on the loan. If you qualify for a hardship |
| There are no credit checks, whatever you | | | | distribution you will still have to pay income tax on |
| choose to do, you will be able to do it since It is | | | | the money if you decide to just take cash |
| your money. | | | | withdrawal, you will have to pay IRS the 10% |
| The loan payment is deducted from your | | | | penalty along with income tax. |
| paycheck. You can get up to 50% of your | | | | If tapping into your 401K or IRA to avoid |
| retirement money or $50,000 which ever is less if | | | | foreclosure is your last resort, then taking out a |
| you get a loan and as long as you do not default | | | | loan from your 401k would be the better choice. |
| on your payments, you will not have to pay any | | | | At least you will be putting the money back with |
| penalties. You can also be eligible for what they | | | | interest. You will want to make sure this solution |
| call a hardship distribution, but will have to pay | | | | will alleviate the problem and not add to it. |
| income tax on the money. | | | | |