Pay off "second home" with inheritance

[Marie Jensen]

We have a second home where one of our adult children is living. She is unable to pay rent (long story but may never be able). Right now we are paying the mortgage of $1,000 a month at 4.125%, with a $188k balance. I am inheriting $250k. Husband is recently retired & receiving max social security (can no longer work.) I work part-time earning around $10-$15k/year & no social security yet. Our home is paid off. We can't take a mortgage deduction since we do not live there.

We are debating whether to pay off the home or invest. We have a large 401k that we were planning on pulling enough to live on, but paying off the house would mean we would need to take less out of the 401k. I know there are a ton of variables to look at, but I would appreciate some input from others on best ways to look at this. (yes, we also have an appointment with a financial advisor.)  Thanks.