Has anyone ever taken a primary residence loan against their 401k? Pros/cons? Most of my savings are tied to 401k at this point due to paying off student loans. Wondering if it is worth (cont.)

like
Posting as :
works at
You are currently posting as works at

I've done it twice. The interest you pay goes back to you, which is good. The money you take out as loan money is out of the market and maybe, possibly, where it would make a better return than the loan interest rate. Only major drawback, at least at D, is if you leave the firm, you'd need to pay back full amount immediately.

like

You have a valid point on the rates, though rates going up will generally drive home prices down. We did a 401k loan for part of our down payment. No penalties as long as you pay it back, and you pay interest to yourself so it's better in a lot of ways than other loan mechanisms. Just keep in mind that you owe it all back immediately if you quit or lose your job. If you can't make the payment you owe taxes and the 10% penalty. If you have a spouse with a 401k as well that gives a good safety net for that eventuality. Keep in mind that most of a mortgage the first 10-15 years is interest and not equity, so you "throw away" almost as much as renting anyway

like

I took a loan to get my downpayment over 20%... avoided getting 2500 PMI, which more than compensated any loss of market wins. When I paid it off, I took out another 50K and invested it... now I'm making money on it, while tricking the system I to letting me save $28k to my 401k a year...

like

Never worth it to take money out of your 401k. Just save over 1-2yrs, maybe live somewhere significantly cheaper/more roommates.

like

I borrowed against the cash value of my whole life insurance for my first place and paid it back pretty quickly. Helped me make a move sooner than without, with minimal long term impact - I'd do it again if I had to.

like

I am planning on doing it too. I live in a very expensive market and haven't been able to save as much as i hoped.

like

Also, the money you pay back doesn't count against your $18k contribution limit, so you lose the opportunity cost of that cash, but there is no big long term hit to your 401k balance like with a withdrawal

like

@D1, disclaimer - I am obviously am a noob about this., but when you say interest pay goes back to you, does that mean that if I took a10k loan from my 401k account with a 4% interest rate; If I paid back in one year that would be now 10.4k in my account? That is, the calculated "loss" would be the net return of the market (for this example let's say 10%) minus the loan interest rate (4%) = 6%, so $600?

like

Yes, correct. Of course, not exact calculation because as you start paying back the loan every paycheck, that money is back in the market. But generally speaking, you've got the idea.

like

Eh, the opportunity cost was 10% either way, before adjusting for risk. You had to pay that extra $400, you didn't "earn" it, but you also don't lose it. Also, you do pay it back with post tax money, so it's really no different than saving for a few years then paying it, except for the timing piece

like

Pulling money from 401k in order to buy house quicker and not pay rent anymore

Thank @K1. That was my original thought. But with interest rates expected to climb in coming year or two, wasn't sure if that saving in interest rate would overcompensate for the fees you would incur borrowing against the 401k

I don't have any cash flow issues with my current rent situation . it is more the now vs later and penalties of the different financing options that have me considering this.

Makes sense. Thanks D1 + D2 for clarification.

Took a loan against my 401k to pay for down payment. Second D1 and D2.

Thanks everyone. Glad to see others who have made similar decisions and had positive experiences. Lots of variables to consider, but these data points will help immensely with the decision making process.

Good luck OP. I'm not sure why, but you will read many articles and have many people tell you not to do it. But why not pay interest to yourself rather than a bank. If you plan on staying where you are job wise and are otherwise financially stable, I don't see he harm.

Related Posts

Aside from all the usual benefits like paid vacation time, health insurance, 401k matching program, have you ever seen a truly unique business perk?

like

Specialist vs Generalist?

I’m starting my career in TAS, and have an opportunity to join the healthcare team at my firm. I am thinking of taking it, and wanted to crowdsource some more pro/cons from seasoned hc professionals.

A big pro for me, is there is a big in-office representation for the group, and with starting my career and a hybrid WFH model, I think it would be advantageous to my learning. I do have an interest in the industry, but have some apprehension in specializing too soon.

like

Maxed out 401k, HSA, has small IRA acct... but no liquidity. Broke as **** Completely addicted to spending money. Any advice on how to save?

like

Hello all - leading a boutique change firm serving healthcare and pharma clients. Looking for someone wanting 6+ month gig as an independent consultant. Great rates but must have healthcare industry and change management experience. DM me if interested.

like

My company is looking to hire people, If interested PM me. Our pharmaceutical practice is looking for Healthcare Professional (HCP) advertising account people and creatives, as well as art directors.

like

Where are all the accounting professionals going? Competitive pay and benefits aren’t enticing enough. People want work/life balance but how can firms provide that when the workforce supply is so low yet demand is at an all-time high. If technology is the answer are there firms that are successfully implementing solutions?

Just started the binding process of a property. Please send me good advices on how to make the next month less terrible!
-first time home buyer
-3.5% down (using PMI and 401k. Don’t judge me pls) though dad could help out some shape or form

like

Anybody here in the market for a recruiter with 20+ years of experience? I’m looking for remote only, minimum of 150k, sign on, and yearly bonus! + if the role is in tech or healthcare (No excessive rounds of interviews)

like

Oracle What are the benefits and shift allowance that oracle employees get who works for 2pm to 11pm shift ??

like

To what extent is moving from LS consulting to healthcare / biotech VC possible without an advanced degree? Feels like for biotech an advanced degree is needed... is it the same for HC VC? What hard skills are needed?

like

I am trying to break into healthcare consulting. I don’t like WFH full time so I’m looking to travel. I have my MHA and 3 solid years of healthcare experience (1 administrative consultant, 1 management role, 1 project manager). Any recommendations on consulting firms that are hiring? Expected salary I should ask for? Referrals would be helpful!

like

Any thoughts for getting the legal benefit during open enrollment? Any success stories or benefits?

like

I got an offer from encora of 21LPA fixed. I have total and relevant experience of 4.5 yr in native android. Can anyone tell me more about company and benefits.

like

Thoughts on becoming a benefits consultant at Aon? I’m currently working in a practice not related to healthcare, but have a degree in actuarial science.

like

Anybody done a dry January before? Not concerned about being able to do it, more just curious what people’s experiences were, the benefits they saw, etc.

like

I used to claim 2k every month for WIFI in TCS for 4 months under straight through employee referral and it by passed my supervisors approval too but a mail used to go to supervisor.
He questioned me a lot after 4 months as if he is paying 2k from his own pocket and I stopped.
Worst policy here. 410 wifi reimbursement we get in TCS lol that gets added into our salary every month.
A normal phone recharge costs more than that and TCS still stuck in its cheap mentality of cost saving.

ZS London compensation and benefits?

like

Hey looking to shift to healthcare consulting from pharma/academia and wanted to see if anyone had any advice

like

Received a benefit/offer from Marriott/SPG..!
2018 Annual Choice Benefits
Option 1. Five Elite Night Credits
Option 2. Five suit night awards

Can someone who have been through this please advise

like

What would you do?

(Or really this is just me typing out loud. )

Currently 6 years at job A at 100K and 10K annual bonus but lil to no upward mobility. It's safe if not going anywhere.

Recruiter reached out regarding Job B at 130K with greater advancement potential but it starts out at 6 Months Contract to Hire per the agency contract. No bonus, benefits adequate by comparison. There is no guarantee to go full time.

Interview just for practice?

likehelpful

More Posts

Has anyone else mentally checked out and is just trying to make it to summer? I need some encouragement on making it to the end of the year. It's challenging because my students are under-resourced.

likeuplifting

Does 2 week's notice include the day you're giving it? E.g. if I give notice today, will my last day be 12th Feb (Friday of next week), or 15th Feb (Monday)?

I've googled it but want to confirm, any help appreciated

like

Anyone know the AWS TAM salary range for DC area?

like
like

Has anyone incorporated responsive classroom into their school-wide PBIS framework? If so, what are some things you did that have worked really well?

like

Any thoughts on poloniex? With binance and bittrexon user registration hiatus I’m looking for another option that my bf can sign up on.
Found very dicey reviews on poloniex, any advice from coin fish?

Got my first regular paycheck at the new job at 145k vs 110k and its not nearly as much more as I thought it would be - is that normal? Feeling discouraged and like I need to make significantly more to really move the needle

likefunny

Anyone familiar with the EVS practice at KPMG? I think it’s their valuations practice but it seems to be mapped under tax.

like

I had gone to apply for my drivers license renewal and they sent it to SAVE for approval, it’s been close to a month now and I haven’t heard back. How long does the SAVE approval typically take?

like

I'm updating my resume for the first time in 3 years and I'm struggling with how long it should be. I can get everything on to one page, but if I want to elaborate about my experience, it's going to be 1.5-2 pages.

like

Anybody here looking to hire a Public Health graduate

like

Out of curiosity what are some perks/benefits offered at your company that you are happy with or would like to be implemented? Could be anything (i.e better vacation time, 401k matching, company outings, free food)

like

Hi Fishes, I have offer from Luxoft 25lpa fixed and Virtusa for 25 fixed + 2 variable pay

Which one to choose?

like

Do any women feel that there is a pattern with balancing the egos and emotional reactions of the males they work with? I am a female senior associate on a partner track at a small firm (25 or less lawyers) and I’m very happy here. I’m the only female in my practice group and it seems like the men (particularly those more at-my-level) constantly have ego issues and problems with their toes being stepped on...

like

Hi Fishes, How much can I expect for a Test Coordinator role with 7 years of experience for a product based company?

like

What is the salary for a supervisor position in a large hospital in the western NY area? I was told the offer might be mid 70k to 80k. I’ve also heard it can go up to 100k.

like

Is kyndryl safe company to join from Ntt Data? Can someone company NTT Data and Kyndryl?

like

I've reached peak churning levels. Can someone make this pandemic go away so I can focus on the art of redemptions?

Chase UR: 437k
Amex MR: 325k
Capital One: 260k
BA miles: 363k

Discover CB: $970 (most of this was arbitraged back in 2015 with the 10% cashback w/ Apple pay)

#flex

like

Aside from all the usual benefits like paid vacation time, health insurance, 401k matching program, have you ever seen a truly unique business perk?

like

Additional Posts in Consulting

Gotta love when Uber shows 5min wait time but once ordered, they assign you to a driver 20min away but say “10min”. Happy Monday!

like

Hey FB fam, does your firm count PTO against your utilization?

like

Saturday morning musings: Lyft driver is pitching me foreign marijuana stocks. A quick google shows all of his companies have negative earnings, to which he says "buy them on the new moon, my man"

like

The amount of change men pull out of their pockets at TSA is astounding. Haven't you guys heard of credit cards?

like

What's the lowest charge ability or utilization rate you have heard of in a year?

like

Anyone else out there use bench time to take bong rips and play online poker?

like

I got laid off with no warning. Reason given was my utilization was low at 81.8%. No performance problems. Would it be inappropriate for me to apply back to PwC to the teams I discussed rolling onto?

like

Received a message on LinkedIn from a recruiter for a software company called Zuora. Anyone ever hear of them / interview with them?

like

Was getting yelled at by senior manager via Zoom for going over budget.
Didn’t respond, just dropped from the call Intentionally, due to the tone/ aggression shown.
Gave him 3 minutes to calm down and rejoined the zoom call.
He settled down and adjusted his tone.
Do you guys think I need to report to HR this behavior or just let it go? I’m a professional not a child to berate.

like
like

AHEAD Anybody here from Ahead consulting? Curious about benefits, I’m switching from senior consultant implementations, to pre-sales architect. Thank you.

like

Ever wish you had an on the road SO? Someone really cool that doesn't work on the same project, but stay at the same hotel so you can casually eat/sleep/bang during the week. What a dream lol

like

Capital One Venture, BankAmericard Travel Rewards or Barclaycard Arrival?