Menu

Home › Forums › Housing › Borrowing from 401K vs. PMI

Viewing 15 posts - 1 through 15 (of 63 total)
1 2 3 4 5
  • Author
    Posts
  • December 17, 2010 at 7:00 PM #18304
    EmilyHicks
    Participant

    Earlier this month I asked about whether we can buy a home with only 10% down payment. We have no problem making monthly payment but for many reasons, we only have about 10% down payment plus some extra money. After reading your answers, it is most likely that we have to a few hundred dollars a month for PMI.

    My fiancee and I saved early and a lot but most of it is in our 401K accounts. We have close to $300,000 in our 401K (we are about 30 yr old). I am thinking aobut borrowing about $50,000 from the accounts and use it as down payment. I know many people advised not touching your retirement accounts but I really don’t want to pay PMI and want to avoid it if I can.

    Current the interest rate for our 401K accounts is 2.75%.

    Do you think this is a better way to go than PMI?

    Thanks,

    December 17, 2010 at 8:05 PM #641430
    patb
    Participant

    i’ve been thinking the same things too.

    December 17, 2010 at 8:05 PM #642540
    patb
    Participant

    i’ve been thinking the same things too.

    December 17, 2010 at 8:05 PM #642219
    patb
    Participant

    i’ve been thinking the same things too.

    December 17, 2010 at 8:05 PM #642083
    patb
    Participant

    i’ve been thinking the same things too.

    December 17, 2010 at 8:05 PM #641502
    patb
    Participant

    i’ve been thinking the same things too.

    December 17, 2010 at 8:34 PM #641507
    scaredyclassic
    Participant

    I borrowed this way. It was all in cash anyway. I saw it as an alternative investment. Interest is paid to yourself.

    December 17, 2010 at 8:34 PM #642224
    scaredyclassic
    Participant

    I borrowed this way. It was all in cash anyway. I saw it as an alternative investment. Interest is paid to yourself.

    December 17, 2010 at 8:34 PM #642088
    scaredyclassic
    Participant

    I borrowed this way. It was all in cash anyway. I saw it as an alternative investment. Interest is paid to yourself.

    December 17, 2010 at 8:34 PM #641435
    scaredyclassic
    Participant

    I borrowed this way. It was all in cash anyway. I saw it as an alternative investment. Interest is paid to yourself.

    December 17, 2010 at 8:34 PM #642545
    scaredyclassic
    Participant

    I borrowed this way. It was all in cash anyway. I saw it as an alternative investment. Interest is paid to yourself.

    December 18, 2010 at 12:13 AM #642153
    joec
    Participant

    I’ve borrowed from my 401k before as well. I think in terms of the cost of getting money, this isn’t a bad way to do it. For a home purchase, I think you could also give yourself longer loan terms as well to stretch out your payments if you need to.

    I did notice various small fees they charge, but in the grand scheme of things…for 50k, there aren’t many cheaper options to access money. Especially since you’re paying the loan interest back to your account.

    If someone mentions it, in regards to double taxation, here is a write up about that as well (there isn’t any):

    Better Example Against Double-Taxation Of 401(k) Loans

    Guaranteed savings interest is very low now so tapping any cash earning low returns and saving $300 on PMI or whatever it costs sounds like a good idea to me.

    December 18, 2010 at 12:13 AM #641572
    joec
    Participant

    I’ve borrowed from my 401k before as well. I think in terms of the cost of getting money, this isn’t a bad way to do it. For a home purchase, I think you could also give yourself longer loan terms as well to stretch out your payments if you need to.

    I did notice various small fees they charge, but in the grand scheme of things…for 50k, there aren’t many cheaper options to access money. Especially since you’re paying the loan interest back to your account.

    If someone mentions it, in regards to double taxation, here is a write up about that as well (there isn’t any):
    http://www.mymoneyblog.com/better-example-against-double-taxation-of-401k-loans.html

    Guaranteed savings interest is very low now so tapping any cash earning low returns and saving $300 on PMI or whatever it costs sounds like a good idea to me.

    December 18, 2010 at 12:13 AM #642289
    joec
    Participant

    I’ve borrowed from my 401k before as well. I think in terms of the cost of getting money, this isn’t a bad way to do it. For a home purchase, I think you could also give yourself longer loan terms as well to stretch out your payments if you need to.

    I did notice various small fees they charge, but in the grand scheme of things…for 50k, there aren’t many cheaper options to access money. Especially since you’re paying the loan interest back to your account.

    If someone mentions it, in regards to double taxation, here is a write up about that as well (there isn’t any):

    Better Example Against Double-Taxation Of 401(k) Loans

    Guaranteed savings interest is very low now so tapping any cash earning low returns and saving $300 on PMI or whatever it costs sounds like a good idea to me.

    December 18, 2010 at 12:13 AM #642610
    joec
    Participant

    I’ve borrowed from my 401k before as well. I think in terms of the cost of getting money, this isn’t a bad way to do it. For a home purchase, I think you could also give yourself longer loan terms as well to stretch out your payments if you need to.

    I did notice various small fees they charge, but in the grand scheme of things…for 50k, there aren’t many cheaper options to access money. Especially since you’re paying the loan interest back to your account.

    If someone mentions it, in regards to double taxation, here is a write up about that as well (there isn’t any):

    Better Example Against Double-Taxation Of 401(k) Loans

    Guaranteed savings interest is very low now so tapping any cash earning low returns and saving $300 on PMI or whatever it costs sounds like a good idea to me.

  • Author
    Posts
Viewing 15 posts - 1 through 15 (of 63 total)
1 2 3 4 5
  • You must be logged in to reply to this topic.