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401k loan question
Posted on 9/12/13 at 4:17 am
Posted on 9/12/13 at 4:17 am
Should I pay off the last 50k on my house with a 401k loan? Note would be essentially the same as well as the time frame of payoff.
2
Posted on 9/12/13 at 6:18 am to tenderfoot tigah
no.
If you lose you job for any reason you will have to pay the entire loan back immediately.
Your also losing the earning potential of that money in your 401k.
If your ready to pay off the house, roll up your sleeves and throw every dime you can find at it.
If you lose you job for any reason you will have to pay the entire loan back immediately.
Your also losing the earning potential of that money in your 401k.
If your ready to pay off the house, roll up your sleeves and throw every dime you can find at it.
Posted on 9/12/13 at 7:12 am to tenderfoot tigah
quote:
Should I pay off the last 50k on my house with a 401k loan?
No, for the reasons already cited.
What is the rate on the mortgage note? If it substantially above current market rates it is probably better to refi. If you have a decent rate today why bother?
Example: If you are paying 4.5%, are in a 25% tax bracket and can deduct the interest, you are really only paying 3.37%. That's pretty close to the rate of inflation, so repaying the note early probably isn't that great a long-term investment.
Posted on 9/15/13 at 12:01 am to foshizzle
Some 401K's have restrictions on loans such as only to purchase a new home can you get the loan. If you pay it off with a 401K loan the interest you pay on loan goes into your 401K vs to the bank. But if you only owe $50K your likely to be paying mostly toward principal now. If your interest is so low that you can't use Sch "A" tax deduction for mortgage interest it's a consideration. Have you considered a byweekly pmt to pay it off sooner? Are you trying to free up credit for another purchase of some type?
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