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(former)FormerSanDiegan
Participantsocratt, there are some cases where people are better off ultimately by building a business opportunity versus blindly investing in markets. The time to do this is in your late 20’s and early 30’s. Good luck on your endeavors.
For others out there … even if you liquidate IRAs (since they have no loan provisions) at least take the loan approach for the last 50k from your 401k.
In many cases you can actually end up with more cash avaliable from the 50% loan than a straight withdrawal due to taxes, phase outs, etc. Do the math.
Participant[quote=scaredycat]i certainly think it’s a better bet to borrow half of it to put ina house than to put half int he market.[/quote]
I’m with scaredy on this one.
Most 401k plans allow you to borrow 50% of your 401k balance up to a loan amount of 50K.
If you have 100K in a 401k, take a loan for 50k, and leaves the rest in a short-term cash position in the IRA, you end up paying about 3 or 4% for the loaned money (about 2k per year or less).
If you withdraw the money, you pay your federal and state marginal tax rates (could easily be 40% combined), plus a 10% penalty. So the expense is about 50K. Also, large withdraws increase income and induce phase outs of many tax credits, deductions, and may put you into AMT, thus increasing your tax bill more than just the tax on the withdrawal itself.
Your hot new investment needs to double just to get back to break-even.
Participant[quote=scaredycat]i certainly think it’s a better bet to borrow half of it to put ina house than to put half int he market.[/quote]
I’m with scaredy on this one.
Most 401k plans allow you to borrow 50% of your 401k balance up to a loan amount of 50K.
If you have 100K in a 401k, take a loan for 50k, and leaves the rest in a short-term cash position in the IRA, you end up paying about 3 or 4% for the loaned money (about 2k per year or less).
If you withdraw the money, you pay your federal and state marginal tax rates (could easily be 40% combined), plus a 10% penalty. So the expense is about 50K. Also, large withdraws increase income and induce phase outs of many tax credits, deductions, and may put you into AMT, thus increasing your tax bill more than just the tax on the withdrawal itself.
Your hot new investment needs to double just to get back to break-even.
Participant[quote=scaredycat]i certainly think it’s a better bet to borrow half of it to put ina house than to put half int he market.[/quote]
I’m with scaredy on this one.
Most 401k plans allow you to borrow 50% of your 401k balance up to a loan amount of 50K.
If you have 100K in a 401k, take a loan for 50k, and leaves the rest in a short-term cash position in the IRA, you end up paying about 3 or 4% for the loaned money (about 2k per year or less).
If you withdraw the money, you pay your federal and state marginal tax rates (could easily be 40% combined), plus a 10% penalty. So the expense is about 50K. Also, large withdraws increase income and induce phase outs of many tax credits, deductions, and may put you into AMT, thus increasing your tax bill more than just the tax on the withdrawal itself.
Your hot new investment needs to double just to get back to break-even.
Participant[quote=scaredycat]i certainly think it’s a better bet to borrow half of it to put ina house than to put half int he market.[/quote]
I’m with scaredy on this one.
Most 401k plans allow you to borrow 50% of your 401k balance up to a loan amount of 50K.
If you have 100K in a 401k, take a loan for 50k, and leaves the rest in a short-term cash position in the IRA, you end up paying about 3 or 4% for the loaned money (about 2k per year or less).
If you withdraw the money, you pay your federal and state marginal tax rates (could easily be 40% combined), plus a 10% penalty. So the expense is about 50K. Also, large withdraws increase income and induce phase outs of many tax credits, deductions, and may put you into AMT, thus increasing your tax bill more than just the tax on the withdrawal itself.
Your hot new investment needs to double just to get back to break-even.
Participant[quote=scaredycat]i certainly think it’s a better bet to borrow half of it to put ina house than to put half int he market.[/quote]
I’m with scaredy on this one.
Most 401k plans allow you to borrow 50% of your 401k balance up to a loan amount of 50K.
If you have 100K in a 401k, take a loan for 50k, and leaves the rest in a short-term cash position in the IRA, you end up paying about 3 or 4% for the loaned money (about 2k per year or less).
If you withdraw the money, you pay your federal and state marginal tax rates (could easily be 40% combined), plus a 10% penalty. So the expense is about 50K. Also, large withdraws increase income and induce phase outs of many tax credits, deductions, and may put you into AMT, thus increasing your tax bill more than just the tax on the withdrawal itself.
Your hot new investment needs to double just to get back to break-even.
Participant[quote=mastergutah]<
>> I have yet to meet an agent who didn’t think that now (whenever that was) was an excellent time to buy.
As a back story, when interest rates rise, which they inevitably will, housing prices will fall.[/quote]
There, you’ve now viurtually met three agents who for a signficant potion of the past four years suggested it was not a good time to buy.
Also, as for interest rates rising resulting in home price declines … Look at 1966 to 1982.
Interest rates TRIPLED during this period (from ~6% to ~18%.
What did home prices do during this period ?What about the periods of rapid inflaiton in the 1970’s ?
Participant[quote=mastergutah]<
>> I have yet to meet an agent who didn’t think that now (whenever that was) was an excellent time to buy.
As a back story, when interest rates rise, which they inevitably will, housing prices will fall.[/quote]
There, you’ve now viurtually met three agents who for a signficant potion of the past four years suggested it was not a good time to buy.
Also, as for interest rates rising resulting in home price declines … Look at 1966 to 1982.
Interest rates TRIPLED during this period (from ~6% to ~18%.
What did home prices do during this period ?What about the periods of rapid inflaiton in the 1970’s ?
Participant[quote=mastergutah]<
>> I have yet to meet an agent who didn’t think that now (whenever that was) was an excellent time to buy.
As a back story, when interest rates rise, which they inevitably will, housing prices will fall.[/quote]
There, you’ve now viurtually met three agents who for a signficant potion of the past four years suggested it was not a good time to buy.
Also, as for interest rates rising resulting in home price declines … Look at 1966 to 1982.
Interest rates TRIPLED during this period (from ~6% to ~18%.
What did home prices do during this period ?What about the periods of rapid inflaiton in the 1970’s ?
Participant[quote=mastergutah]<
>> I have yet to meet an agent who didn’t think that now (whenever that was) was an excellent time to buy.
As a back story, when interest rates rise, which they inevitably will, housing prices will fall.[/quote]
There, you’ve now viurtually met three agents who for a signficant potion of the past four years suggested it was not a good time to buy.
Also, as for interest rates rising resulting in home price declines … Look at 1966 to 1982.
Interest rates TRIPLED during this period (from ~6% to ~18%.
What did home prices do during this period ?What about the periods of rapid inflaiton in the 1970’s ?
Participant[quote=mastergutah]<
>> I have yet to meet an agent who didn’t think that now (whenever that was) was an excellent time to buy.
As a back story, when interest rates rise, which they inevitably will, housing prices will fall.[/quote]
There, you’ve now viurtually met three agents who for a signficant potion of the past four years suggested it was not a good time to buy.
Also, as for interest rates rising resulting in home price declines … Look at 1966 to 1982.
Interest rates TRIPLED during this period (from ~6% to ~18%.
What did home prices do during this period ?What about the periods of rapid inflaiton in the 1970’s ?
Participant[quote=captcha][quote=scaredycat]what do you mean, cash back? just keep the same offer in place, but they give me money at closing?[/quote]
You can ask the seller to fix items for you or to give you money at closing.
I had maybe $300 worth of repairs and the bank said no (did not fix, did not give money). A friend of mine got $20K (mostly related to his pool).[/quote]Captcha captcha’d the essence of what I suggested.
After inspection, buyers typucally ask for repairs or credit towards closing in lieu of repairs. For both houses I sold, there was a long laundry list of requested repairs. I typically agreed to the saftety-related ones (electrical issues, etc) and provided credit to buyer in cases where it would have been too long or not worthwhile to do the repair.Do you have an agent ? They should be making these types of suggestions.
Participant[quote=captcha][quote=scaredycat]what do you mean, cash back? just keep the same offer in place, but they give me money at closing?[/quote]
You can ask the seller to fix items for you or to give you money at closing.
I had maybe $300 worth of repairs and the bank said no (did not fix, did not give money). A friend of mine got $20K (mostly related to his pool).[/quote]Captcha captcha’d the essence of what I suggested.
After inspection, buyers typucally ask for repairs or credit towards closing in lieu of repairs. For both houses I sold, there was a long laundry list of requested repairs. I typically agreed to the saftety-related ones (electrical issues, etc) and provided credit to buyer in cases where it would have been too long or not worthwhile to do the repair.Do you have an agent ? They should be making these types of suggestions.
Participant[quote=captcha][quote=scaredycat]what do you mean, cash back? just keep the same offer in place, but they give me money at closing?[/quote]
You can ask the seller to fix items for you or to give you money at closing.
I had maybe $300 worth of repairs and the bank said no (did not fix, did not give money). A friend of mine got $20K (mostly related to his pool).[/quote]Captcha captcha’d the essence of what I suggested.
After inspection, buyers typucally ask for repairs or credit towards closing in lieu of repairs. For both houses I sold, there was a long laundry list of requested repairs. I typically agreed to the saftety-related ones (electrical issues, etc) and provided credit to buyer in cases where it would have been too long or not worthwhile to do the repair.Do you have an agent ? They should be making these types of suggestions.
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