Should You Pull Money From Your 401(k) to Pay Off Your Mortgage? Dave Ramsey Weighs In With His Take

Core Insights - The average sale price of a home in the U.S. is $500,000 as of September, with a median price of $426,000, reflecting a 63% increase from a decade ago [3][7] - Mortgage rates have risen to 6.9%, an increase of 800 basis points since mid-September, despite expectations of a decline following Federal Reserve interest rate cuts [4][7] - Withdrawing from a 401(k) to purchase a home incurs a 10% penalty and is subject to income tax, which can significantly impact the financial benefits of such a decision [5][6][7] Housing Market Trends - The median home price in the U.S. reached $426,000 in September, which is more than double the price from 20 years ago [3][7] - If current inflation trends continue, the price of a new house could exceed $601,000 in the next decade [3] Financial Considerations - The decision to withdraw from a 401(k) for home purchase is complicated by penalties and tax implications, which can diminish the perceived advantages of owning a home outright [5][6][7] - The rising mortgage rates and home prices are making it increasingly difficult for average Americans to achieve homeownership, a key aspect of the American Dream [2][4]