03-18-2013 08:13 AM
03-18-2013 08:29 AM
Yes, that's exactly what i did. You can get the residential loan and choose to pay it back in 20 years, but you have to submit documentation and there's processing time. I requested my general loan online on a friday afternoon, and we had the check in hand a week later. Because it's your own money, it shouldn't ding your DTI any to have the shorter payback time (and if the loan is small enough, you'll probably put all the money back in with a lump some payment a lot quicker than 5 years, like i am doing).
I'm not a big fan of doing the residential loan unless its absolutely necessary. The plan might be to put the money back a lot sooner than 20 years, but life happens. You want as much of that money back in the account as possible as quickly as you can.
03-18-2013 01:08 PM
03-19-2013 12:47 PM
04-01-2013 05:14 PM
I had the same question.
I was just wondering about whether or not it would look bad or if there were any disadvantages to getting the funds now. I will be submitting an offer next week. I figured I might as well get the 401K loan out of the way...
04-02-2013 05:38 AM
Yeah, that was my thinking as well. No need to fax any paperwork. You just take the general loan and you've got your money. It doesnt' look bad - unless you wind up spending the proceeds of the loan on a new "toy" or something that's not house related. lol
There are no disadvantages to getting the money now. We needed to put down a deposit of $5,000 before the builder would start so I had no interest in messing around with faxing paperwork and such. Plus, i wanted to pay back as much of the loan right away as I could possibly afford. It's a good reminder to put all the money back as soon as possible instead of assuming you'll pay it back at some point in the next 20 years (residential loan).
In my experience, people generally get used to only having to make a tiny payment to their 401k and wind up spending the extra money each month on something else, rather than making it a priority to save up the balance of your loan and put it all back ASAP. Also, if you're paying enough back each month (I took a $10,000 loan, and i pay back about $200 in principal a month), you'll have less of a balance to save for!
04-03-2013 07:48 AM
04-03-2013 08:22 AM
Well, i certainly think if someone is going to try and get a mortgage that is $800 more per month than their rent, then sure, leave some room...however, I wouldn't advise anyone to do that in the first place. Obviously it was what you and your family decided to do, but I don't think most individuals are going to put themselves in a position to make that kind of jump.
These are personal decisions based on everyone's own situation....but it does no good to put $600 per month into a savings account, yet only pay back 15-20 per month on your 401k loan. The savings is offset by the debt. You need to save more to pay back the loan, and if you're going to use the money you're saving to pay the balance off in a lump sum, it's going to take you longer to save which means you're paying more interest.
There are many ways to look at it...but I'd never do a residential loan. Too many things can go wrong between now and the time I "plan" on paying back the loan - including moving on from a job (in which case your loan is due in full or you get hammered with more taxes), that it's just more comfortable to know i'm putting the money back ASAP. Obviously this depends on what you can afford, but if you can't afford the loan payment, you probably can't afford the mortgage anyway.
04-03-2013 11:11 AM
04-03-2013 11:20 AM
it wouldnt matter to me how you did it