But since i am not 59.5 years yet if I withdraw looks like 20% federal withholding charge and about 10% I have to pay in taxes which means i loose around 30% of my 401k amount which I  accrued over many years

There are also instances that loan interests are paid at the end of the project (withdrawn during sale/refinance) which is referred to as accrued/deferred interest.Best of luck!

You can pull some cash out to pay off debt assuming you have enough equity to do so.This will free some cash up to overpay on your mortgage note which then helps your LTV as you pay down your balance.This also saves you accrued interest you'd otherwise be responsible for if you simply just satisfied the term and current interest associated w/ your mortgage.

The most beneficial item here is that the interest rate (8% or so) was still was accruing on my original balance (while I'm borrowing my own money).  

So I am okay holding this property and accruing the equity.  

I am about to close on a new house that I plan to house-hack while I accrue capital.

That's what I kind of figured, but I know my car loan would accrue additional interest every single day after the 1st until it was paid.

Here is what it says:"Upon any failure of Resident to occupy the Premises for the full term of a fixed term tenancy, for any reason other than as provided in ORS 90.453(2), 90.472 or 90.475, Owner/Agent may charge Resident either:---A)all of the following: i) all rent, unpaid fees and other non-rent charges accrued prior to the date that Owner/Agent knew or reasonably should have known of the abandonment or relinquishment of the Premises; ii) all damages relating to the condition of the Premises; iii) an early termination fee in an amount not to exceed one and one-half month's stated rent and which is due on the earlier of the date Resident gives notice to vacate or the date the Premises is vacated; iv) interest on the above amounts at the statutory rate from the date each was due, and v) all other amounts due at the times specified in this Rental Agreement; or prospective buyers or B) all actual damages resulting from the early termination, including but not limited to: i) repayment of concessions; all rent through the earlier date the Premises is re-rented and the lease termination date; ii) advertising and administrative costs to re-rent the Premises; iii) concessions given to re-rent the Premises; iv) the difference in rent if a lower rental rate is received from a replacement resident during the remaining term of the original Rental Agreement; v) damages related to the condition of the Premises, and iv) interest on all amounts at the statutory rate.

To be clear, the pay off is the principle balance plus any accrued interest and fees, etc. if the loan is behind. 

You can still accrue them for future use (and I am not a CPA, so I may not be getting this 100% correct), but there are limitations that the tax law imposes.