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BklynBabe12
LIF Adolescent
Member since 1/12 561 total posts
Name:
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Home buying - 401k
Can someone explain to me about how the 401K (retirement) can work towards the use of the closing costs, or down payment or any kind of home buying process?
DH's coworker was discussing this with him. Do you get taxed? How does this work?
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Posted 3/6/13 4:28 PM  |
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evrythng4areason
And then there were 4
Member since 1/10 5224 total posts
Name:
Kayla
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Home buying - 401k
We took out a loan against ours, so there were no taxes/penalties
It gets taken out of dh's check each month
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| Posted 3/6/13 5:05 PM |
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AScottWolf
I <3 our squish!
Member since 11/10 2237 total posts
Name:
Adriana
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Re: Home buying - 401k
I did this when buying the home also.
Basically, I also borrowed against my loan. So the money stayed in the 401k and I'm earning interset on the full original amount. Also, any interest that I'm paying on my 401k "loan" will be put directly into my account. So I'm paying myself back.
I pay it back 4x's a year and have 5 years to pay it off (I think).
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| Posted 3/6/13 6:13 PM |
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BabyBoy
is Skylar Elizabeth
Member since 5/05 4189 total posts
Name:
Tom
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Re: Home buying - 401k
You are borrowing against your 401k amount. Keep in mind, you can only do 50% of you total. You have to pay it back in a certain time frame
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| Posted 3/6/13 6:24 PM |
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Erica
LIF Adult
Member since 5/05 11767 total posts
Name:
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Re: Home buying - 401k
Posted by BabyBoy
You are borrowing against your 401k amount. Keep in mind, you can only do 50% of you total. You have to pay it back in a certain time frame
if you leave you job (fired and laid off as well) you have to pay it back in 1 month or incur fees, penalties and taxes.
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| Posted 3/6/13 6:33 PM |
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MST9106
My life:)
Member since 6/06 9589 total posts
Name:
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Re: Home buying - 401k
As the above posts state, you can take out a loan against your 401K with a very low interest rate, however, you can only borrow up to 50% of your current account and it must be paid back during the time of your employment. If you leave or are terminated, you are expected to pay it all back before you withdraw or roll over your 401K account elsewhere.
ETA: I forgot to mention that you do not get taxed or penalized. IMO if you're short on cash for your closing costs or downpayment, this is a good way to go.
Message edited 3/7/2013 10:35:21 AM.
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| Posted 3/7/13 10:34 AM |
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JennZ
MY LIFE!!
Member since 8/05 25463 total posts
Name:
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Re: Home buying - 401k
We borrow from our 401k, we paid it back the next month no fees.
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| Posted 3/7/13 10:51 AM |
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Re: Home buying - 401k
Just want to add that 401(k) can be useful for home buying because, even if you are draining all of the cash in your bank accounts for down payment/closing costs, the lender will consider your 401(k) as adequate cash reserves (assuming you have enough in there).
I would just talk to a mortgage professional about how you can leverage your 401(k) to your advantage when buying a home.
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| Posted 3/7/13 11:03 AM |
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BklynBabe12
LIF Adolescent
Member since 1/12 561 total posts
Name:
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Re: Home buying - 401k
Thank you for all who responded.
We aren't hoping to touch our 401K but it was a good "backup plan" just incase.
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| Posted 3/7/13 11:25 AM |
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