Borrowing from retirement accounts for down payment

[Anonymous]

Anonymous wrote:

Anonymous wrote:If you have room in your budget for repayment, you would have room in your budget to save. Clearly you don’t, because you don’t have the savings.

This makes no sense.

It makes perfect sense. How do they plan to repay? Whatever money will be going toward that should be funneled into saving for the larger down payment. It doesn’t sound like there are time constraints.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:If you have room in your budget for repayment, you would have room in your budget to save. Clearly you don’t, because you don’t have the savings.

This makes no sense.

It makes perfect sense. How do they plan to repay? Whatever money will be going toward that should be funneled into saving for the larger down payment. It doesn’t sound like there are time constraints.

No it makes zero sense. They’re saving money in the 401k. It sounds like your suggestion is they stop saving in the 401k and save in their regular account until they get $50k. Nothing wrong with thanking the loan OP. Not everyone has tens of hours ands of dollars sitting around.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:If you have room in your budget for repayment, you would have room in your budget to save. Clearly you don’t, because you don’t have the savings.

This makes no sense.

It makes perfect sense. How do they plan to repay? Whatever money will be going toward that should be funneled into saving for the larger down payment. It doesn’t sound like there are time constraints.

No it makes zero sense. They’re saving money in the 401k. It sounds like your suggestion is they stop saving in the 401k and save in their regular account until they get $50k. Nothing wrong with thanking the loan OP. Not everyone has tens of hours ands of dollars sitting around.

So you are advising them to take $50k out of the 401k, then stop making 401k contributions for the 3-5 years it takes to repay the 401k loan?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:If you have room in your budget for repayment, you would have room in your budget to save. Clearly you don’t, because you don’t have the savings.

This makes no sense.

It makes perfect sense. How do they plan to repay? Whatever money will be going toward that should be funneled into saving for the larger down payment. It doesn’t sound like there are time constraints.

No it makes zero sense. They’re saving money in the 401k. It sounds like your suggestion is they stop saving in the 401k and save in their regular account until they get $50k. Nothing wrong with thanking the loan OP. Not everyone has tens of hours ands of dollars sitting around.

So you are advising them to take $50k out of the 401k, then stop making 401k contributions for the 3-5 years it takes to repay the 401k loan?

No, I’m saying that the 401k is savings and there is nothing wrong with borrowing from it. I save more in the 401k instead of a regular account because I can take a loan if I need to.

[Anonymous]

Anonymous wrote:I say neither - but a smaller house that you can afford now and make it work. No one NEEDS a huge house as their kids get older, and then you won’t have to downsize again when you reach retirement and the giant home doesn’t make sense anymore.

+1

Agree.

You are not buying within your means. You're buying something you can't afford.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:If you have room in your budget for repayment, you would have room in your budget to save. Clearly you don’t, because you don’t have the savings.

This makes no sense.

It makes perfect sense. How do they plan to repay? Whatever money will be going toward that should be funneled into saving for the larger down payment. It doesn’t sound like there are time constraints.

No it makes zero sense. They’re saving money in the 401k. It sounds like your suggestion is they stop saving in the 401k and save in their regular account until they get $50k. Nothing wrong with thanking the loan OP. Not everyone has tens of hours ands of dollars sitting around.

So you are advising them to take $50k out of the 401k, then stop making 401k contributions for the 3-5 years it takes to repay the 401k loan?

No, I’m saying that the 401k is savings and there is nothing wrong with borrowing from it. I save more in the 401k instead of a regular account because I can take a loan if I need to.

That’s nice. How do you recommend they repay the 401k loan if they don’t have room in their budget?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:If you have room in your budget for repayment, you would have room in your budget to save. Clearly you don’t, because you don’t have the savings.

This makes no sense.

It makes perfect sense. How do they plan to repay? Whatever money will be going toward that should be funneled into saving for the larger down payment. It doesn’t sound like there are time constraints.

No it makes zero sense. They’re saving money in the 401k. It sounds like your suggestion is they stop saving in the 401k and save in their regular account until they get $50k. Nothing wrong with thanking the loan OP. Not everyone has tens of hours ands of dollars sitting around.

So you are advising them to take $50k out of the 401k, then stop making 401k contributions for the 3-5 years it takes to repay the 401k loan?

No, I’m saying that the 401k is savings and there is nothing wrong with borrowing from it. I save more in the 401k instead of a regular account because I can take a loan if I need to.

That’s nice. How do you recommend they repay the 401k loan if they don’t have room in their budget?

So to be clear, you think that because they can’t come up with 50 grand all at once, they can’t afford a couple hundred a month loan payment for 15 years? Like I said, your comments make no sense. It sounds like problems you’ve never had to deal with.

[Anonymous]

What's your expected income growth relative to the cost of owning the house? I think this is what answers the question. Many people buy first homes using 80-10-10's, and same with a 401k loan. That's because it makes more sense to buy the house now and pay off the "small" loan quickly than to rent longer or do two buy/sell house transactions (which, by the way, could cost you in closing costs more than a $50k 401k loan + 20% gains you might experience if you left it in the stock market for a year). But this only makes sense if over a few years you pay off your "mini" loan quickly with your increased earnings. But if your family income is flat (or decreasing once you have a family), all you're really doing is buying more house than you can afford now by saying that later you plan on buying more house than you can afford...

Also, you should look into these "less than 20% down no PMI" loans --- we have had several mortgage brokers mention them to us now and I know a couple of banks are advertising them on the radio. In the case of one mortgage broker, he said if you could show 18 months payments available in the bank (even if that was in your 401k balance), they offered competitive rates with 15% down instead of 20%. I didn't pursue it because we don't need it, but you should ask what other options there are... javascript:void(0);

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:If you have room in your budget for repayment, you would have room in your budget to save. Clearly you don’t, because you don’t have the savings.

This makes no sense.

It makes perfect sense. How do they plan to repay? Whatever money will be going toward that should be funneled into saving for the larger down payment. It doesn’t sound like there are time constraints.

No it makes zero sense. They’re saving money in the 401k. It sounds like your suggestion is they stop saving in the 401k and save in their regular account until they get $50k. Nothing wrong with thanking the loan OP. Not everyone has tens of hours ands of dollars sitting around.

So you are advising them to take $50k out of the 401k, then stop making 401k contributions for the 3-5 years it takes to repay the 401k loan?

No, I’m saying that the 401k is savings and there is nothing wrong with borrowing from it. I save more in the 401k instead of a regular account because I can take a loan if I need to.

That’s nice. How do you recommend they repay the 401k loan if they don’t have room in their budget?

So to be clear, you think that because they can’t come up with 50 grand all at once, they can’t afford a couple hundred a month loan payment for 15 years? Like I said, your comments make no sense. It sounds like problems you’ve never had to deal with.

No, this sounds like a problem you’ve never had to deal with.

You can’t repay a 401k loan over 15 years. You have 5 years. And if you leave your job (or get fired, or laid off) before that 5 years is up, you repay the loan immediately, or it is treated as income, and taxed accordingly, plus 10 percent. But you’re not withholding that money through payroll deduction, so come April 15, OP will owe thousands (or tens of thousands to the IRS). And again, she doesn’t have room in her budget to save, so where will the money to pay the tax bill come from?

OP isn’t asking about a loan to feed her children or obtain life-saving medical care: she wants to buy a luxury item.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:If you have room in your budget for repayment, you would have room in your budget to save. Clearly you don’t, because you don’t have the savings.

This makes no sense.

It makes perfect sense. How do they plan to repay? Whatever money will be going toward that should be funneled into saving for the larger down payment. It doesn’t sound like there are time constraints.

No it makes zero sense. They’re saving money in the 401k. It sounds like your suggestion is they stop saving in the 401k and save in their regular account until they get $50k. Nothing wrong with thanking the loan OP. Not everyone has tens of hours ands of dollars sitting around.

So you are advising them to take $50k out of the 401k, then stop making 401k contributions for the 3-5 years it takes to repay the 401k loan?

No, I’m saying that the 401k is savings and there is nothing wrong with borrowing from it. I save more in the 401k instead of a regular account because I can take a loan if I need to.

That’s nice. How do you recommend they repay the 401k loan if they don’t have room in their budget?

So to be clear, you think that because they can’t come up with 50 grand all at once, they can’t afford a couple hundred a month loan payment for 15 years? Like I said, your comments make no sense. It sounds like problems you’ve never had to deal with.

No, this sounds like a problem you’ve never had to deal with.

You can’t repay a 401k loan over 15 years. You have 5 years. And if you leave your job (or get fired, or laid off) before that 5 years is up, you repay the loan immediately, or it is treated as income, and taxed accordingly, plus 10 percent. But you’re not withholding that money through payroll deduction, so come April 15, OP will owe thousands (or tens of thousands to the IRS). And again, she doesn’t have room in her budget to save, so where will the money to pay the tax bill come from?

OP isn’t asking about a loan to feed her children or obtain life-saving medical care: she wants to buy a luxury item.

Your ignorance and arrogance is astounding. You have 5 years for a regular loan and 15 years for a home loan. Just quit while you’re behind.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:If you have room in your budget for repayment, you would have room in your budget to save. Clearly you don’t, because you don’t have the savings.

This makes no sense.

It makes perfect sense. How do they plan to repay? Whatever money will be going toward that should be funneled into saving for the larger down payment. It doesn’t sound like there are time constraints.

No it makes zero sense. They’re saving money in the 401k. It sounds like your suggestion is they stop saving in the 401k and save in their regular account until they get $50k. Nothing wrong with thanking the loan OP. Not everyone has tens of hours ands of dollars sitting around.

So you are advising them to take $50k out of the 401k, then stop making 401k contributions for the 3-5 years it takes to repay the 401k loan?

No, I’m saying that the 401k is savings and there is nothing wrong with borrowing from it. I save more in the 401k instead of a regular account because I can take a loan if I need to.

That’s nice. How do you recommend they repay the 401k loan if they don’t have room in their budget?

So to be clear, you think that because they can’t come up with 50 grand all at once, they can’t afford a couple hundred a month loan payment for 15 years? Like I said, your comments make no sense. It sounds like problems you’ve never had to deal with.

No, this sounds like a problem you’ve never had to deal with.

You can’t repay a 401k loan over 15 years. You have 5 years. And if you leave your job (or get fired, or laid off) before that 5 years is up, you repay the loan immediately, or it is treated as income, and taxed accordingly, plus 10 percent. But you’re not withholding that money through payroll deduction, so come April 15, OP will owe thousands (or tens of thousands to the IRS). And again, she doesn’t have room in her budget to save, so where will the money to pay the tax bill come from?

OP isn’t asking about a loan to feed her children or obtain life-saving medical care: she wants to buy a luxury item.

Your ignorance and arrogance is astounding. You have 5 years for a regular loan and 15 years for a home loan. Just quit while you’re behind.

OP, listen to this poster.

Both of you should take $50k from your 401ks, and combine that with existing savings to buy the best house you can stretch for. You don’t want your kids to go to a school with the poors, and I bet your incomes will rise exponentially at your current employers once you buy a house.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:If you have room in your budget for repayment, you would have room in your budget to save. Clearly you don’t, because you don’t have the savings.

This makes no sense.

It makes perfect sense. How do they plan to repay? Whatever money will be going toward that should be funneled into saving for the larger down payment. It doesn’t sound like there are time constraints.

No it makes zero sense. They’re saving money in the 401k. It sounds like your suggestion is they stop saving in the 401k and save in their regular account until they get $50k. Nothing wrong with thanking the loan OP. Not everyone has tens of hours ands of dollars sitting around.

So you are advising them to take $50k out of the 401k, then stop making 401k contributions for the 3-5 years it takes to repay the 401k loan?

No, I’m saying that the 401k is savings and there is nothing wrong with borrowing from it. I save more in the 401k instead of a regular account because I can take a loan if I need to.

That’s nice. How do you recommend they repay the 401k loan if they don’t have room in their budget?

So to be clear, you think that because they can’t come up with 50 grand all at once, they can’t afford a couple hundred a month loan payment for 15 years? Like I said, your comments make no sense. It sounds like problems you’ve never had to deal with.

No, this sounds like a problem you’ve never had to deal with.

You can’t repay a 401k loan over 15 years. You have 5 years. And if you leave your job (or get fired, or laid off) before that 5 years is up, you repay the loan immediately, or it is treated as income, and taxed accordingly, plus 10 percent. But you’re not withholding that money through payroll deduction, so come April 15, OP will owe thousands (or tens of thousands to the IRS). And again, she doesn’t have room in her budget to save, so where will the money to pay the tax bill come from?

OP isn’t asking about a loan to feed her children or obtain life-saving medical care: she wants to buy a luxury item.

Your ignorance and arrogance is astounding. You have 5 years for a regular loan and 15 years for a home loan. Just quit while you’re behind.

OP, listen to this poster.

Both of you should take $50k from your 401ks, and combine that with existing savings to buy the best house you can stretch for. You don’t want your kids to go to a school with the poors, and I bet your incomes will rise exponentially at your current employers once you buy a house.

Again, problems some people never have to deal with. This person is being sarcastic as hell but if their kids were in a school rated a 1 or 2 and they had to borrow from a 401k to get into a forever home with great school they would do it. But for some random internet stranger it’s a no go.

OP do what is best for your family. You and your spouse should be able to figure it out and remember you can always repay the loan faster if you get a promotion.

[Anonymous]

That poster wasn’t sarcastic, she was agreeing with you.

[Anonymous]

Anonymous wrote:That poster wasn’t sarcastic, she was agreeing with you.

I don’t think so. No one else mentioned that both spouses take 491k loans.

[Anonymous]

Anonymous wrote:

Anonymous wrote:That poster wasn’t sarcastic, she was agreeing with you.

I don’t think so. No one else mentioned that both spouses take 491k loans.

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