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Talk to me about borrowing from 401k

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jzsnow
Frequent Contributor

Talk to me about borrowing from 401k

I know...not a good idea. However, I am doing it.

Now, my issues. We are going usda and the seller paid 5k in closing costs. We needed around 2k. Can I borrow the full $5500 we wanted to from the 401k on a residential loan vs the standard 5 year loan? The residential loan gives us 15 years to pay back. I'd never take that long, but like I have that option.

So, with the residential 401k loan, I have to show a contract on the home. Will I only be allowed to take whatever it says my part of the closing costs would be?
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2 REPLIES 2
Amythyst
Contributor

Re: Talk to me about borrowing from 401k

Well I did a hardship withdrawal and it said I wasn't allowed to take more than what my need was.  I assume the residental loan would require the same proof but I'm not 100% sure.  I had to show my contract and my fee worksheet showing how much I was required to pay.

Message 2 of 3
cahomebuyer
Member

Re: Talk to me about borrowing from 401k

We will also be using our 457 for the downpayment/costs.  In looking online it requires proof of a contract for us to get the amount of money we need for the loan. I would imagine all of these type of accounts require documentation as you're gettting the 15-year-payback option on a real estate loan versus just using the money for something else.

 

We'll also have to pay off some balances using the 457 so we'll actually have two loans (max), one without the 15 years payback option.  

 

 

Michael & Barbara

Goal: Buy House
Problems: Chase Short Sale, Chase Heloc #1, Chase Heloc #2, Capital 1 C/O
Scores: EQ 676 EXP 688 TU 684
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