The case
Linda owes $120,000 on a house worth almost three times that. Her sister Denise calls the mortgage the most dangerous number in her life and says to pay it off with the 401(k), today.
We test three plans side by side: keep paying as is, pay it all off from the retirement account, or send extra from the paycheck. The numbers include the taxes and the Medicare surcharge that most mortgage advice skips.
The verdict
Pay it off, but from the paycheck, not from the 401(k) and not from the cash cushion. In this example, an extra $752 a month clears the loan by 67 and saves about $13,400 in interest with no tax bill.
This is a verdict for Linda's facts, not yours. Her numbers are an example we chose. Use the free tool below to test your own.
Free tool for this case
Payoff or Keep It: put in your own numbers and see the same checks the case ran.
What is inside the video
- The phone call: Denise's alarm
- Everyone has advice
- The rules: interest and principal
- Denise's plan, tested
- The part most mortgage advice skips: taxes and Medicare
- Receipts: where every number comes from
- The verdict, and three things to do this week
Sources used in the video
- IRS Revenue Procedure 2025-32 (2026 tax brackets and standard deduction)
- Medicare.gov, Costs (Part B premium and income-based surcharge)
- Bankrate mortgage and savings rate survey, Oct 21, 2026 (shown on screen in the video)
- Social Security figures carry over from Case File 1 (SSA)
Linda and Tom are fictional. The narration is a synthetic voice and the illustrations are made with AI tools. Educational only, not financial, tax or legal advice. Tax figures are federal and leave out state income tax. How we check our numbers.