We purchased a home 2 years ago for $975K. My interest rate is 6.3% so my mortgage is $4900/mo. Currently I owe $640K on the home. My wife lost her job recently and with only one income at the moment I started thinking about finances.
I know I will pay a 10% penalty if I pull $640K out of my IRA or 401K. But, if I divide $64000 by the interest I pay every month, $3363, I come out to a break even of 19 months of interest.
I realize the amortization schedule will advance over 19 months, but historically it's only changed by $10 a quarter.
My question is this: I have never heard of anyone doing this. However, if I plan to stay in my home for 2 years or more, is it worth it?
In regard to appreciation, I realize this is a factor, but this home has doubled in value over the last ten years and homes continue to be built in the surrounding areas, so it appears demand is still high.