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[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]

If you were removing a mortgage in its entirety from your house, it might be worth it simply for the peace of mind of only having to pay real estate taxes and eradicate the mortgage. YMMV, and there are those who would rather be enthralled to debt because it is "tax deductible."

With that said, putting all your eggs in the basket of real estate is also problematic -- you become a landlord or pay management companies, both of which are taxing (heh). Property appreciation is no more guaranteed than stock market appreciation.

What are the numbers. There is of course the 10% penalty and the fact that any withdrawal will be taxed at a very high tax bracket. Would it take 2-3 years to make up the money (and removing a 2nd trust is always a good thing?) Or would it take 20 years to pay back?[/quote]

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