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Started By
Message
HELOC or 401K
Posted on 8/2/21 at 9:09 am
Posted on 8/2/21 at 9:09 am
I need about $50K to do some updating to my home. Which would you do. I have good credit and a comfortable 401K amount right now.
3
Posted on 8/2/21 at 9:23 am to Potchafa
I would never take out enar that large of a 401k loan unless you could pay it back very very quickly. If you lose your job or leave for a new job with that hanging around, you're on the hook for a huge bill. By law if you leave the company for any reason, the 401k loan must be paid back in full by the tax return in the following year. I.E. if you got laid off now, by April 15, 2022 you would have to pay back that entire 401k loan, if you cant, then you default and pay huge penalties.
What is the purpose of this, to sell your home or just want upgrades?
What is the purpose of this, to sell your home or just want upgrades?
This post was edited on 8/2/21 at 9:32 am
Posted on 8/2/21 at 9:30 am to thunderbird1100
Upgrades. My home is +/- 110 years old with original wood siding. Getting it professionally painted is hard to do where I live. So I'm doing custom vinyl siding, new windows, new front porch and some concrete work.
Posted on 8/2/21 at 9:43 am to Potchafa
HELOC
Posted on 8/2/21 at 10:09 am to Fat Bastard
Thanks baws. I appreciate it. I figured this would be the advise given. Just wanted to hear it from a few money minded people.
Posted on 8/2/21 at 10:09 am to Potchafa
quote:
Thanks baws. I appreciate it. I figured this would be the advise given. Just wanted to hear it from a few money minded people.
no problem
Posted on 8/2/21 at 10:21 am to thunderbird1100
I agree taking out such a large 401k loan would not be advisable. But I'm not sure this is accurate:
I may be wrong, but I think this is set out by the plan and not by law. I don't think all plans require immediate repayment and would allow monthly payments to be set up. Maybe I'm wrong though.
quote:
By law if you leave the company for any reason, the 401k loan must be paid back in full by the tax return in the following year.
I may be wrong, but I think this is set out by the plan and not by law. I don't think all plans require immediate repayment and would allow monthly payments to be set up. Maybe I'm wrong though.
Posted on 8/2/21 at 10:26 am to Potchafa
Don't cover wood siding with vinyl!
Posted on 8/2/21 at 10:28 am to Potchafa
HELOC but pay it off like a car loan. All helocs are adjustable rate 15yr mortgages. the problem is most people only make min payments and drag them out. Make a plan and pay it off in 5-7 years. if you cant do this after the work is done do a cash out mortgage and fix the rate and payment on the HELOC. I make a good living on combining first and second mortgages because people cant manage a HELOC.
Posted on 8/2/21 at 10:38 am to hawkeye007
HELOC, your equity is high right now and you won't get rates this low probably ever again.
This post was edited on 8/2/21 at 10:38 am
Posted on 8/2/21 at 10:42 am to STLhog
your right , HELOC rates can move up overnight and will once the FED raises the rate. its a safe best for the next 12-18 months then that rate is moving up.
Posted on 8/2/21 at 10:43 am to frankthetank
quote:
but I think this is set out by the plan and not by law. I don't think all plans require immediate repayment and would allow monthly payments to be set up
Correct. You'd have to check your plan documentation for specifics although it's worth noting the majority of these plans do require repayment upon termination.
Posted on 8/2/21 at 11:12 am to FinleyStreet
I'm in same boat as OP. Want to pay off misc debt however. No upgrades but roughly 30k in debt with about 60k in Hone equity. HELOC the best option?
Posted on 8/2/21 at 11:35 am to Patfic15
quote:
I'm in same boat as OP. Want to pay off misc debt however. No upgrades but roughly 30k in debt with about 60k in Hone equity. HELOC the best option
Heloc doesnt look at dollar amount equity. It does percentages.
What is your first mortgage balance?
How much is your home worth?
Most helocs max out around 85% to 90% combined loan to value. If you can fit your goals in that window, do it. Then put your credit cards in the freezer.
Posted on 8/2/21 at 11:56 am to meansonny
130k on a value of 205k.
Posted on 8/2/21 at 12:03 pm to frankthetank
quote:
I may be wrong, but I think this is set out by the plan and not by law. I don't think all plans require immediate repayment and would allow monthly payments to be set up. Maybe I'm wrong though.
I guess I should have phrased it you will get a tax bill + penalty from the government if it's not taken care of by the tax return date of the following year.
So basically, regardless what the payback agreement is, you want it paid back by that date otherwise the government sees it as income and will tax you on the distribution + penalty. Again if you are term'd from said job.
This post was edited on 8/2/21 at 12:11 pm
Posted on 8/2/21 at 12:04 pm to Patfic15
You should be able to get $45k no problem.
Posted on 8/2/21 at 1:33 pm to meansonny
Thats about where I'm at also. Thanks people!!
Posted on 8/2/21 at 1:43 pm to Potchafa
quote:Id be real slow to cover the wood with vinyl. Make sure you get some opinions on this. I cant imagine you cant get a crew out for that type of a job to paint it.
Getting it professionally painted is hard to do where I live. So I'm doing custom vinyl siding, new windows, new front porch and some concrete work.
Posted on 8/2/21 at 2:19 pm to tigerfoot
You know painters. Hard to find one that doesn't smoke dope on the job are stop working at 2:30 to start drinking beer. I've put alot of money on the inside. So I want the outside to reflect the same.
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