re: Borrowing money from 401k...how does this work usually?

I understand some of you might not know the Nashville market, but the only reason I even have a shot at this house is a friend I trust very much lives there and is one of their realtors.

80% of them are already sold and I'm on top of a waitlist for the rest (due to said friend). I reached out to them to ask about it, not the other way around. He is the opposite of pushy and like I said, I trust him very much.

And the neighborhood outside this development is consistently rising in demand for the last 10 years. And its a 2 minute commute to me and my wife's office. Nashville housing market is fricking absurd. My friends who live there bought 1 year ago and their neighbors sold for 50k over what they paid in 8 months. I'm getting it at a price per/sq. ft that is very good for the area currently as well.

I have talked to the 401k folks and several other colleagues who have done the borrow option, and its way better than what is being said in here. Obviously, its a per case thing, but in my case its a solid deal for what I need and its not some insurmountable amount of money. It would be a monthly payment roughly equal to what I currently put into the 401k, so I could just stop contributing for 1 year and allocate that money to repaying the loan. I'm 28 and don't put some massive amount in my 401k each month either.

And 5% is for traditional loan with my lender. The entire point of going over 3.5% (which I have currently) is to avoid an FHA so the PMI falls off at 78-80% owed.


And to repeat, this house would have very, very affordable mortgage for us. Very similar to what we currently pay in rent and still live comfortably. Its a small townhome that I would rent eventually when the PMI falls off when we outgrow it due to its great location. Its extremely close to downtown and a ton of office buildings. And due to the breathing room of the mortgage will continue to put away savings each month.

Its happening...so just wish me luck



ETA:

People pay in cash, over asking, the HOUR they go on sale in these neighborhoods in Nashville right outside downtown. Its truly ridiculous. This is one that hasn't gotten too absurd to afford yet, but its very, very close to that point.