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Would it ever be ok to tap into 401k for a first time home purchase?
Posted on 10/28/15 at 8:31 pm
Posted on 10/28/15 at 8:31 pm
Thanks.
Posted on 10/28/15 at 8:34 pm to Herb484
No. You cannot replace time in the market. Find another way.
Posted on 10/28/15 at 9:26 pm to Herb484
No. I would have to be in a really dire situation to consider tapping into any of my retirement accounts.
Posted on 10/28/15 at 9:45 pm to NewIberiaHaircut
Money is so cheap right now, no need to tap 401k
Posted on 10/28/15 at 10:58 pm to Herb484
Yes, if you're 35 or under.
Posted on 10/29/15 at 8:33 am to Paul Allen
This is where I completely disagree with Dave Ramsey - that one should stop investing until debt is paid off. You loose that time in the market, but I guess I don't see millions of people following me vs following him.
Posted on 10/29/15 at 8:42 am to Herb484
Horrible idea.
1. You pull money out of the market.
2. The money is taxed at your income + 10%.
3. If you can't save money to do the down payment on the house, are you going to have the resources to pay a monthly note?
1. You pull money out of the market.
2. The money is taxed at your income + 10%.
3. If you can't save money to do the down payment on the house, are you going to have the resources to pay a monthly note?
Posted on 10/29/15 at 9:14 am to LSU0358
I don't disagree with numbers 1 and 2, but 3 is way off.
Plenty of people could afford a monthly note on a house but have trouble saving up the large sums you would need for a down payment. It just depends on your situation.
Plenty of people could afford a monthly note on a house but have trouble saving up the large sums you would need for a down payment. It just depends on your situation.
Posted on 10/29/15 at 9:17 am to Herb484
you can get a house for 5% down...if you can't say 5% you don't need a house
Posted on 10/29/15 at 9:31 am to bawbarn
It is not a horrible idea if the following pertain to you.
1. if you can avoid a penalty on the withdrawal. Alot of 401k's allow you to withdraw penaty free for a first time home purchase. You still have to pay taxes on it though.
2. How much have you been putting in? More than the maximum matching? IN other words my compay will match up to 6% of my paycheck. But I put in 10%. i have been putting more in on my own volition, money that I could be saving for a down payment. taking that extra 4% out does not seem so bad now does it?
3. If you have 10% saved up and you can purchase the house, but putting an extra 10% down(money from your 401k) will allow you to avoid mortgage insurance and get a lower rate, then there could be rather significant savings in the long run. As long as items 1 and 2 pertain to you still.
just my opinion. Some of the idiots on this board take them and their opinions way too seriously. everyone's situation is different.
1. if you can avoid a penalty on the withdrawal. Alot of 401k's allow you to withdraw penaty free for a first time home purchase. You still have to pay taxes on it though.
2. How much have you been putting in? More than the maximum matching? IN other words my compay will match up to 6% of my paycheck. But I put in 10%. i have been putting more in on my own volition, money that I could be saving for a down payment. taking that extra 4% out does not seem so bad now does it?
3. If you have 10% saved up and you can purchase the house, but putting an extra 10% down(money from your 401k) will allow you to avoid mortgage insurance and get a lower rate, then there could be rather significant savings in the long run. As long as items 1 and 2 pertain to you still.
just my opinion. Some of the idiots on this board take them and their opinions way too seriously. everyone's situation is different.
Posted on 10/29/15 at 9:38 am to yellowfin
quote:This is such a "i live in a part of the country where housing is cheap" line.
you can get a house for 5% down...if you can't say 5% you don't need a house
Posted on 10/29/15 at 9:39 am to Herb484
There is no single answer that applies to every situation. You have to consider the circumstances and determine whether the costs of using 401(k) money are acceptable. Some home buying opportunities have limited time frames, and the benefits of acting may exceed the costs of using 401(k) money for the purchase.
And then there are different types of money from the 401(k). If the money is a loan from the 401(k) for the down payment, then it might make sense where a distribution might not.
Rather than relying on answers from internet message board posters, you should consult with someone knowledgeable about retirement investing and income taxes to analyze the facts and circumstances of your situation. They should be able to provide you with specific advice rather than a blanket generalization.
And then there are different types of money from the 401(k). If the money is a loan from the 401(k) for the down payment, then it might make sense where a distribution might not.
Rather than relying on answers from internet message board posters, you should consult with someone knowledgeable about retirement investing and income taxes to analyze the facts and circumstances of your situation. They should be able to provide you with specific advice rather than a blanket generalization.
Posted on 10/29/15 at 9:51 am to Herb484
I did it to allow me to
(a) Avoid PMI by putting 20% down
(b) Made a more comfortable 15 year note.
There are good reasons to do it.
(a) Avoid PMI by putting 20% down
(b) Made a more comfortable 15 year note.
There are good reasons to do it.
Posted on 10/29/15 at 10:18 am to Herb484
More information on the situation would provide better answers.
Posted on 10/29/15 at 10:29 am to lsupride87
quote:
This is such a "i live in a part of the country where housing is cheap" line.
The OP lives in Texas. Unless he's holding out for River Oaks in Houston or Highland Park in Dallas this likely won't apply to him.
Posted on 10/29/15 at 10:33 am to Herb484
quote:
If you can't save money to do the down payment on the house, are you going to have the resources to pay a monthly note?
Posted on 10/29/15 at 11:13 am to lsupride87
quote:
This is such a "i live in a part of the country where housing is cheap" line.
salaries are usually pretty much in line with cost of living and if they aren't I'd find a different place to live
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