Reply to How did you afford your $1M plus home?

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]Similar situation here as the OP.  I was thinking of a [b]hardship[/b] withdrawal from 401K plan to get most of the downpayment -- not wise financially, but the only alternative I can think of.  [b]Silly?[/b][/quote]
Hardship?
Seriously?
Yes, silly.[/quote]

I am the silly one.  "Hardship" is just a generic term:  the 401K plan will allow me to take up to my whole balance for a number of reasons, which they call "hardship" reasons.  One such reason is the purchase of a primary residence.  I will not take all the balance, but a sizable chunk of it.

Why do I want to do that?  This is the context:  HHI of about $300K+, current mortgage about $710K, current home value about $800K.  Almost no car or other debt, but nanny expenses.  Problem: for a number of reasons (long story), we don't have a lot of savings, other than our $90K home equity (which will go down to $50K or so if/when we sell due to realtor fees), and my 401K.  (We have good pensions, and we're not touching those).

We want to move for schools to MoCo in a couple of years, but we are aiming to a smallish, not updated home.  We've seen homes we like for less than $850K.  So we'll plan to use about $120K of the 401K, plus some other minor savings and current equity.  I don't see any other way to get the downpayment.  Still silly to get $120K from a 401K plan if really want to move?  Why?[/quote]
Sorry but if you currently haven’t saved any money and have no savings, no matter what the reasons, then you should not be buying a $1m home or any home that you can’t afford a down payment on without your 401K. There are plenty of homes out there for less than that. Maybe they aren’t your dream home, but truth is you clearly can’t afford your dream home. People need to start being realistic in what they want and what they can afford.  And no I am not someone who lives in a $1m home. When buying our home we were realistic in what we could afford. For us that was $450k. By afford I mean a mortgage that was reasonable and still left us with enough money to live in a way we like, save aggressively for retirements and college, save for the sake of saving and having an emergency fund. Sure I drooled over the more expensive homes that needed no work, were in neighborhood I absolutely loved and had the top schools, but I knew those were not an option for us. So we bought in an area with good school, but not the best ones. Still I love our neighborhood and look forward to raising our children there. While my home is not my dream home I like it and look forward to making it the home of my dreams over time.

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