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re: Is borrowing against your 401(k) for a home down payment a good idea?
Posted on 12/15/13 at 9:46 am to saintforlife1
Posted on 12/15/13 at 9:46 am to saintforlife1
Consider the gap this would create in your 401k. You will pay yourself interest, but it will probably be around half of what your 401k returns. That gap could exceed the cost of PMI or whatever other means you have to borrow the $30k.
1
Posted on 12/15/13 at 1:30 pm to lsu711
quote:
Consider the gap this would create in your 401k. You will pay yourself interest, but it will probably be around half of what your 401k returns. That gap could exceed the cost of PMI or whatever other means you have to borrow the $30k.
Not all 401k plans are set up this way. In my plan, you just borrow the money with the funds in the plan as collateral. The money you borrow still sees the same growth as it would if you didn't borrow against it. If his 401k is setup this way, I don't see any issue with it.
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