summary: do not touch 401k

1. You have penalty, interest.
Although You pay yourself interest. But the interest part is double taxed, The interest itself is after tax dollor. When you take the money including interest out, that part is taxed again.

2. 10-10-80 loan:
Most of time we pay 20% downpayment to avoid PMI-Primary Mortgage Insurance. But if you do not have 20%, you can pay 10% and take second home equity loan to make 20% first loan. The Home Equity loan has higher interest so you want to pay off ASAP. You avoid paying Mortgage insurance by funding your 20% downpayment with the second loan against your house.