2006-08-29 19:42:01 · 9 answers · asked by Price is what you pay for value. 3 in Business & Finance ➔ Renting & Real Estate
OK more details:
I want to buy a $500K condo, but mortgage payment is about $3000/month. I bring home about $3600/month. It is hard to live with $600 cash after mortgage payment.
The agent suggested 10% down instead of 20. But that wouldn't work, because mortgage rate is higher with smaller downpayment, which result higher monthly payment. The agent suggested cashing out my 401K to increase the downpay.
I worry about tax and panalties from IRS.
2006-08-29 20:16:05 · update #1
Hi BrokenRomeo, I wasn't kidding. The conversation actually took place. I was really disappointed at the realtor, because she is a friend!
2006-08-29 22:15:48 · update #2
Do not do it! If you borrow against your 401(k) to purchase a house, there are no penalties, but you do need to pay back what you borrow. Also, in order to get the payments down to a level you could afford, you would need to take out a significant chunk of money which will greatly affect the value of your 401(k) when you retire. If you haven't already, speak with a mortgage company to determine what you can get approved for. Lenders usually won't lend you more than you can afford because they want to see the loan repaid. Where I work, your house payment and monthly debts shown on your credit report cannot exceed 45-50% of your gross monthly income. This helps prevent clients from getting in over their head. It would be awful to borrow out of your 401(k), get in the condo, then find you can't afford the taxes and insurance along with your other bills. The condo could get foreclosed on, you would lose the home and the money you borrowed from your 401(k), and your credit would be shot.
2006-08-30 00:40:43 · answer #1 · answered by dlapasky 2 · 1⤊ 0⤋
you have got to give more details for people to answer!
where is the house?
how old are you?
cashing in one's 401K is a major decsion to make.
borrow on it, but don't cash it in.
a 401K grows based on compounded interest, over long term.
borrow only the amount you need to make the deal happen
because when you are paying it back, it is on money that
has been taxed.
so if you borrow an excessive amount, when you get
distribution at retirement , it gets taxed again.
i would advise not cashing in your 401K .
if you can't afford the house,
you can't afford the house.
500 thousand is a lot to spend on a condo!
and no yard?
that sounds quite excessive.
what about home owner dues?
have you budgeted for that?
come down to earth a bit!
i spent 200 thousand on a townhome in a
beautiful neighborhood.
pass this deal by,
sounds like you are trying to keep up with the jones'es.
the agent is more concerned about his commission.
Good luck.
2006-08-29 19:49:53 · answer #2 · answered by john john 5 · 0⤊ 0⤋
Nice and simple: You cannot afford it! Do not cash out your 401k! She is not your friend!
Be realistic... living of $600 a month? You will loose that condo in no time. Wait until the market comes down, then BORROW against your 401k!
2006-08-30 09:01:11 · answer #3 · answered by Eric 4 · 0⤊ 0⤋
do no longer carry to lots cost to the 'each and daily mail' and that is scare mongering. I even have considered this take place two times , as quickly as in 1977 the drop began approximately seventy six' and as quickly as lower back in 1988 expenses had peaked to an all time 'unnatural intense' this led to a great drop over here few years, the two those drops have been accompanied with the help of great will develop peaking to an all time intense in 2007. components expenses in basic terms somewhat count style in case you have unfavorable fairness yet my suggestion is to hold on in there in case you may it is going to optimistically come good. As for purchase to enable investors those are a obligatory evil renting in some factors is in short supply and all of us would desire to stay someplace. .
2016-12-17 19:36:49 · answer #4 · answered by bunton 4 · 0⤊ 0⤋
That is outrageous....Please don't do this, it is wrong in so many ways....Is there any way you can find a home that isn't so expensive? How about finding a distressed property and get a home equity loan to rehab it.....Your payments would be lower...Or you should wait, I believe the market has yet to bottom out, and since the housing in your areas seems high, you should definitely wait....And fire your agent!
2006-08-30 05:16:14 · answer #5 · answered by Anonymous · 0⤊ 0⤋
No way! Do not use your 401K. Look into a combo loan such as an 80/20. You can email me if you would like. I give free mortgage advise all of the time. mortgage_info_4U@yahoo.com
Carter
2006-08-30 02:58:18 · answer #6 · answered by mortgage_info_4u 2 · 0⤊ 0⤋
I believe there are times you can cash out a part of your 401K to purchase your first home without paying a penalty. Contact the financial company who handles your 401K and ask them or ask your accountant for advice.
2006-08-29 20:14:48 · answer #7 · answered by ? 3 · 0⤊ 0⤋
Your agent is lying and don't cash out your 401k you'll regret it later in life. Besides that $600 amonth left over, what about utilites, food, clothing, ect. I hope you are joking.
2006-08-29 20:28:52 · answer #8 · answered by BrokenRomeo 5 · 0⤊ 0⤋
ditch your agent, he is not act on your interest because he worry for his fee only. How could he said that it is a buyer market?
2006-08-29 19:56:12 · answer #9 · answered by Hoa N 6 · 0⤊ 0⤋