Reply to Cashing out 401K to payoff mortgage

Forum Index » Money and Finances

Reply to "Cashing out 401K to payoff mortgage"

Subject:

Emoticons





More smilies

Text Color: Font: Close Marks

[quote=Anonymous][quote=Anonymous]bad idea right?  we are seriously considering cashing out one of the 401Ks and paying off a second trust on our house, we then plan on saving payment each month to grow our cash reserves and just have some more security in that we won't lose our house if we lost a job or had to take significant paycuts.   we will also be able to refinance and take advantage of the low rate.  Here's how I see it:

Pros:  pay off high interest 2nd trust
Refi 1st and lower payments by almost 2K a month
ability to be more flexible in job market (ie. no needing to make 300k a year)

Cons - obvious - taxes, penalties, losing future returns on investments.

anybody done this even though its against all conventional wisdom?  [/quote]

BAD idea! That is a seriously dangerous thing to do and tells me that if you are willing to cash out your retirement, you are way over extended
1) on paying off high interest 2nd  -  cant you refi that loan for a lower rate? also,that interest is a deduction. 
2) on refi on the 1st - what is stopping you from doing this now? also depending on how much you have on that 2nd you might be able to roll the 2nd into the 1st.  
3) ability to change jobs - this comment alone tells me you should probably just sell the house and downsize now. Even if you lose a little money, it pales in comparison to the damage you will do to your fincances if you cash out your 401k

As for borrowing against it? well, you hinted that you would like to change jobs which means you would need to repay that loan shortly after leaving that job.

Just don't do it! Sell the damn house and downsize.[/quote]

Options

	Disable HTML in this message
	Disable BB Code in this message
	Disable smilies in this message

Review message

Search Recent Topics Hottest Topics