Re: Can I use my 401k to help me purchase my dream home?[ Edited ]
10-02-2012 06:14 AM - edited 10-02-2012 06:16 AM
borrow the funds from the 401k
the payments do not figure into dti
this is the est course of action for most
+1... This is what I did. I borrowed 8.5k from my 401k to help with DP and closing costs in January 2012 of 11k on a conventional mortgage w. 5% down, 3% sellers paid closing costs, 175k sales price. The 401k loan payments did not factor into my DTI since it was secured by my own financial assets. My 401k balance is about 50k and I'm 31. I paid off the 401k loan in April with my bonus. Then I took out another loan against my 401k and paid off my husbands dodge which he bought before our marriage. The interest rate was 21% on that dodge... I would much rather pay myself 5.5% than pay Americredit 21%
Not telling you what to do. But at your age. And having that much already in there. You should have just withdrawn that amount to pay for a house. Not borrowed it. Buying a house is one of the reasons you're allowed to withdraw money from it
This is terrible advice. If she didn't NEED to withdrawl it, and could afford to pay it back it isn't smart to just withdrawl. There is taxes on that amount that you immediately lose. Having 50k in 401k is great, but it takes a lot more than that to retire. Please don't solicite uneducated advice
Actually it's not uneducated advice. It's a matter of opinion. You don't have to agree with it. So save your pathetic insults. It says a lot about you as a person. I've purchased two homes. Yes there are taxes involved when you withdraw from your plan, but if you're purchasing your first home. Knowing that a home is likely the largest purchase you will make. And considering we're only talking $8000. At 31, it's absolutely a good option.
Again, you don't have to agree with it. I'm sure if you talk to 20 Financial Advisors. You will get several opinions on this. Some may even tell you to do a combination of both. Doesn't make either opinion uneducated, right, or wrong.