i am trying to make minimal home repairs that will amount to around $1500 so that it can be in a sellable condition, but I don't know if we should get a loan or request $ from 401k...we plan on repaying that money with the gain from the sale...if we leave the house as is, it will sell for even less than any repair value that we put into it. HELP!!!!!!!
2007-02-26 05:32:43 · 9 answers · asked by JustWondering 1 in Business & Finance ➔ Personal Finance
Your best option is probably the 401(k) loan. Just make certain that it's paid back. Otherwise, the amount will be considered a distribution and be taxed as income. If you're less than age 59.5, you'll also be penalized 10%.
The home equity loan/line is probably not a good option, as most lenders require them to be open 2-4 years. Compare lenders and see what the penalty is for early closure.
2007-02-26 07:29:50 · answer #1 · answered by Rob D 5 · 0⤊ 1⤋
take a loan from your 401k. There's no fees associated with it. since you're talking such a small amount it's not a big deal. Make sure you pay it back though. Do not let yourself think that you can just keep making the payments. You do not want to take a distribution.
If you can get a zero fee line of credit with a low interest rate from your bank then that's ok too. But, I doubt that you will be able to get one of those. Fees associated with obtaining one will be more then the interest you'll pay.
2007-02-27 03:54:59 · answer #2 · answered by digdowndeepnseattle 6 · 0⤊ 0⤋
If you withdraw money from a 401k program, you will automatically be assessed a 10% early withdrawl tax by the IRS, then what ever money you do receive will be taxed at your federal tax bracket for 2007 (assuming a pre-tax 401k). This will tell you the "real" interest rate you'll be paying for that money. Maybe use it as collateral for a bank loan.
2007-02-26 05:42:29 · answer #3 · answered by barbara 2 · 0⤊ 0⤋
In general, a 401(k) loan is a bad idea. However, given that you're looking at a short timeframe (a few months?), it's fine. That way, all interest is paid BACK to you. With a regular loan, someone else gets the interest payments.
2007-02-26 05:40:45 · answer #4 · answered by Jay 7 · 0⤊ 0⤋
Get an interest only home equity line on the house you are selling. The funds will be paid to the lender when you close on this house. If you sell quickly...you won't have to pay too much interest!!!! Good luck.
2007-02-26 05:42:50 · answer #5 · answered by baryymahoginer 2 · 0⤊ 0⤋
Suze Orman says never to take from your 401K. Take out the small loan and repay it when you sell the house. Good luck.
2007-02-26 05:41:56 · answer #6 · answered by Sarah S 2 · 1⤊ 0⤋
I would get a Home equity line of credit for the amount you need. The interest you pay back will be peanuts.
2007-02-26 05:55:25 · answer #7 · answered by KathyS 7 · 0⤊ 0⤋
401K a loan is just more money you have to pay back. I hate borrowing money, because well I hate paying it back!
2007-02-26 05:40:07 · answer #8 · answered by Anonymous · 0⤊ 0⤋
401k is the best...
The "interest" gets paid directly back to you instead of throwing it away to someone else.
2007-02-26 05:42:54 · answer #9 · answered by Anonymous · 0⤊ 0⤋