Using 401K loan on down payment for house

[sayyestothis]

Just to add to this, see what payment options your plan offers if you were to separate.

Also, if you do take it as a tax hit, it's 20% federal tax,any state taxes and a 10% penalty may apply, but speak with a tax advisor if you can be an exception for it.

Thats incorrect it would be a 10% penalty on top of whatever their tax bracket is taxes at but the distribution will bump their income up for the yr.

20% is a default witholding for fed from lump sum distributions but if they are in a higher tax bracket it will be whatever they are getting taxes at.

 

[Pimp]

it depends on how much i want to...i can pay off a 50 k loan in less than five yrs...as opposed to a bank which will take a lot longer

5 years... 50k gone from your account sounds smart how.. What if you lose your job?

 

[theworldismine13]

Thanks for the replies so far.



Between wife and I, 20K debt total when counting everything but our current mortgage. We gross around $200K.



1. I should clear about 35K when I sell my home.
2. Outside of a job relocation, I plan to be in the house for a long time.
3. House is too big and too far away from work. I don't want to deal with renting out my property. It's a townhouse with very high association fees.
4. I'm more likely to switch jobs so would do this with my girl's 401K



Her job is mostly safe (you never know) and she's not looking to move anywhere.



Looking to have lower monthly bills and not get raped by MIP/PMI.

yeah in that case I wouldnt see anything wrong with using the 401K, but I would keep the house.

yeah it mos def will be a headache but that is why you need to find a good property manager so you dont have to deal with it.

If you document your rental income properly, it will be neutral as far as applying for another mortgage goes. and over the long term the equity you gain from renting the house and paying off the first mortgage over time will make the headaches more than worth it

 

[Big Skilly Films]

5 years... 50k gone from your account sounds smart how.. What if you lose your job?

Do you know that's your money right? What if you lose your job and borrowed from the bank you still gotta pay it back same difference except you borrowing your money and paying yourself back with interest look man I don't need a YouTube video to know how it works but do you go borrow someone else's money and pay them back with higher interest that's on you

 

[Rekkapryde]

Read a lot of different sites but wanted to see what everyone here thinks. I'm looking to sell my current home and move. My cash savings is minimal (6 months emergency funds) but 401K is healthy. I've worked to pay off the majority of my debt (cars, school loans, no CC) so I can afford the monthly hit paying the 401K loan back. Has anyone else done this and would they recommend it?

You can actually use your 401k to buy a home without having to pay it back.

One of my boys did this with his 401k after he got divorced. Bought his new crib outright with his 401k.

 

[EztheUnknown]

Borrowing from your 401(K) cannot be classified as good or bad it all depends on your personal situation and market conditions. The market has been doing pretty good for the past few months so right now is not an ideal time to take money out because of the lost of earnings on the amount you decide to take out. If the market starts trending down then I'd say go for it. If you do decide to borrow the money I don't think it would hinder your future to much.

 

[Pimp]

Borrowing from your 401(K) cannot be classified as good or bad it all depends on your personal situation and market conditions. The market has been doing pretty good for the past few months so right now is not an ideal time to take money out because of the lost of earnings on the amount you decide to take out. If the market starts trending down then I'd say go for it. If you do decide to borrow the money I don't think it would hinder your future to much.

Market conditions? shyt has been on up since 2009... Somebody here had a 42% return last year.. Had he borrowed from his 401k to save like 1% on a loan he would have lost a lot of money...

If you have to go into your 401k you probably can't afford what you're looking to get. I never even thought of going into my 401k because I have more liquid than I have in my 401k...

 

[EztheUnknown]

Market conditions? shyt has been on up since 2009... Somebody here had a 42% return last year.. Had he borrowed from his 401k to save like 1% on a loan he would have lost a lot of money...

If you have to go into your 401k you probably can't afford what you're looking to get. I never even thought of going into my 401k because I have more liquid than I have in my 401k...

You think the market has gone straight up with no down periods since 2009??? Long term? Yes, the market has proven to always appreciate. However the market is and will always be volatile so if you take your money out of it during the right time then it can be an advantage. Almost everyone's 401K took a hit in 2015.

 

[Truefan31]

Read a lot of different sites but wanted to see what everyone here thinks. I'm looking to sell my current home and move. My cash savings is minimal (6 months emergency funds) but 401K is healthy. I've worked to pay off the majority of my debt (cars, school loans, no CC) so I can afford the monthly hit paying the 401K loan back. Has anyone else done this and would they recommend it?

Don't do it breh. Your income is really good. Just hunker down and save. If you have to lower your 401k contribution temporarily if it means saving money for the new home. Not even counting the tax disadvantage of doing 401k loans it's leveraging your retirement dollars breh. There's a reason most planners worth a salt are against 401k loans unless it's absolute emergency, hence why you have an emergency fund.

 

[Truefan31]

Thanks for the replies so far.



Between wife and I, 20K debt total when counting everything but our current mortgage. We gross around $200K.



1. I should clear about 35K when I sell my home.
2. Outside of a job relocation, I plan to be in the house for a long time.
3. House is too big and too far away from work. I don't want to deal with renting out my property. It's a townhouse with very high association fees.
4. I'm more likely to switch jobs so would do this with my girl's 401K



Her job is mostly safe (you never know) and she's not looking to move anywhere.



Looking to have lower monthly bills and not get raped by MIP/PMI.

You'd be better off doing a 80/10/10 loan to avoid pmi if you don't have 20%.

Seriously don't do a 401k loan. You know that in your head. You did great paying off ur cc n student loans. Seriously with no debt you'll be able to save quickly.

5 great reasons not to borrow from your 401(k)

Think Twice Before Taking Out a 401(k) Loan

 

[Pimp]

You think the market has gone straight up with no down periods since 2009??? Long term? Yes, the market has proven to always appreciate. However the market is and will always be volatile so if you take your money out of it during the right time then it can be an advantage. Almost everyone's 401K took a hit in 2015.

2015- 10.92%

 

[Pimp]

Don't do it breh. Your income is really good. Just hunker down and save. If you have to lower your 401k contribution temporarily if it means saving money for the new home. Not even counting the tax disadvantage of doing 401k loans it's leveraging your retirement dollars breh. There's a reason most planners worth a salt are against 401k loans unless it's absolute emergency, hence why you have an emergency fund.

Exactly....

 

[Marco Andretti]

Lol yal ain't figure out a way to NOT have to pay a mortgage yet? ..


I refuse to drop gems in here until they lock this section of the coli up but cmon.


Think brehs.. think..


How can we use what's ours to claim what's ours for free ? .. there's a way brehs

N paying a mortgage .. excuse me .. lemme rephrase that.


PAYING a mortgage with our money we WORKED for...

And PAYING a mortgage with
"money" we "earned" are 2 different things

Now let's see which 6 certs actually know what I'm talkin about or are Certy enough to research..

I'm in the books heavy these days fore this knowledge .. it's golden guys n it's ours

 

[delta]

Lol yal ain't figure out a way to NOT have to pay a mortgage yet? ..


I refuse to drop gems in here until they lock this section of the coli up but cmon.


Think brehs.. think..


How can we use what's ours to claim what's ours for free ? .. there's a way brehs

N paying a mortgage .. excuse me .. lemme rephrase that.


PAYING a mortgage with our money we WORKED for...

And PAYING a mortgage with
"money" we "earned" are 2 different things

Now let's see which 6 certs actually know what I'm talkin about or are Certy enough to research..

I'm in the books heavy these days fore this knowledge .. it's golden guys n it's ours

 

[daboywonder2002]

Read a lot of different sites but wanted to see what everyone here thinks. I'm looking to sell my current home and move. My cash savings is minimal (6 months emergency funds) but 401K is healthy. I've worked to pay off the majority of my debt (cars, school loans, no CC) so I can afford the monthly hit paying the 401K loan back. Has anyone else done this and would they recommend it?

usually you can withdraw for purposes like this and like someone said. Are you sure you are gonna be at your job for that long?? you dont want the penalties if you do leave your gig