I would definitely not cash in a 401-K or IRA to pay off a house.
I'm over 50, and lived through the inflation of the 70s. I can remember CDs and something called repurchase agreements (sold by S&Ls) paying 13+% interest.
I'm not a history buff, but after the Arab Oil Embargo in 1973, the US economy was in the dumps for years. The sudden spike in energy prices was followed by inflation and a stagnant economy. The government tried various things to stop the inflation, including a wage/price freeze. After the freeze ended, inflation jumped even higher.
Right now, we're beginning to see commodity inflation in food, energy, and raw materials. The latest inflation numbers are relatively subdued, partly to how the government measures inflation. The government has a vested interest in reporting low inflation numbers, since programs such as social security increases are tied to the inflation numbers. Real inflation (as measured by the "shadow CPI statistics") is significantly higher. See the following website:
http://www.shadowstats.com/
1982 to 2000 was a secular bull market. I believe a secular bear market began in 2001. A secular bull or bear market will last somewhere between 12 - 20 yrs. You can look back through history at the secular bull and bear cycles and draw your own conclusion to where we're going in the next few years.
The fed is essentially printing money when it lowers the interest rates. This is causing the US dollar to drop relative to the Euro and other currencies. I think interest rates on mortages are going to gradually rise, inflation will rise, and the US economy will be lukewarm at best.
All told, your 5.25% loan may look like a bargain within a few short years.
Right now, there are investment stocks that pay 12 - 15% annual dividends on a monthly to quarterly basis. These stocks involve natural gas production, crude oil transport, and mining. If you purchase these stocks, the dividends are currently taxed at 15%. If you're in the 25% federal tax bracket, you come out ahead just due to the difference in tax rates.
Up until about two years ago, I used to send extra money with my house payment. Now I only pay the minimum because I'm earning double the interest rate that I'm paying.
Mike