VIZ,
You understand the concept well…
a 401K loan is also a possible way to avoid mortgage insurance, with the savings representing a guaranteed return.
1) Find out if you can repay the loan at any time in a lump sum if you want to
2) Your CD interest will be taxable, possibly making your net return not much more than your 401K sheltered return. One way to avoid this is with a tax sheltered acct if possible.
3) The major downside to a 401K loan is that if you lose or leave the job, you may have to repay it in full within 30/60 days otherwise it is taxed as income plus a penalty (10%+)
Check with YOUR plan administrator for their rules and ask lots of questions before taking the loan.
