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Started By
Message
re: Borrowing money from 401k...how does this work usually?
Posted on 2/23/16 at 4:45 pm to elposter
Posted on 2/23/16 at 4:45 pm to elposter
quote:
Just the way you are describing your financial situation, difficulty to endure 5k in extra expenses over a year's time, etc., I'd be worried about jumping into home ownership right now. That shite has so many expenses you don't realize, it could put you in a bad situation. It's nothing for 10k of crap to go wrong in your house in a year. Sounds like you need more liquid savings before owning a home to be honest. Not saying a 401k loan is always a bad idea, but the hidden costs of homeownership can kill you if you have depleted your savings just to buy the thing.
Fair.
Thanks for the advice.
FTR, I could pay back the 5k in a few months if I wanted to if that makes a difference. Just would rather have more money in my account on a regular basis.
I need to talk to my 401k people to see what the loan period is and what kind of rates they have.
ETA:
I'm also lucky in the fact we both have families who would be willing to help in the event of a financial issue. I just want to avoid asking for a down payment. Really wanted this house to be "ours" for some reason.
This post was edited on 2/23/16 at 4:46 pm
3
Posted on 2/23/16 at 4:47 pm to TheCaterpillar
Pride is overrated. Free money is always better than a 401k loan.
Posted on 2/23/16 at 4:48 pm to TheCaterpillar
quote:
Fair. Thanks for the advice.
No problem. I speak from experience. We stretched for our first house and were surprised at how much money we put into it the first year. We made plenty of money according to all the charts for how much home you can afford, easily qualified for way more than our mortgage, etc. but we were cash poor and depleted savings to buy the house. Only time in my life I carried credit card debt from month to month. Hated it.
Posted on 2/23/16 at 4:54 pm to TheCaterpillar
quote:
I'm also lucky in the fact we both have families who would be willing to help in the event of a financial issue. I just want to avoid asking for a down payment. Really wanted this house to be "ours" for some reason.
If they would pitch in for a down payment, you could always take the "loan" from them.
They put down whatever you need, you just set up an auto bank account transfer to their checking account on whatever terms you come to. I'm sure they'll even give you 0% interest if they were going to give you the money anyways.
That way you avoid all the negatives, and still get to call it your own.
This post was edited on 2/23/16 at 4:55 pm
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