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My wife and I are considering something that we would like some help with. We are each 37 years old and together we have about $240,000 in our 401K Plan. (Roughly split 50%/50%) We can not afford a higher mortgage payment than we currently have, and are considering withdrawing a lump sum as a hardship withdrawal, (Paying the penalties, state taxes and Federal Taxes) in order to fund a refinancing of our house from a 30 year loan rate to a 15 year fixed rate.
We realize that these penalties are substantial, but so are the overall savings when we finance from a 30 yr to a 15yr.

How foolish are we??
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