I currently own a home in Southern Calif and I owe about $100,000 on it at about 5%. I am moving to Detroit area but don't want to sell the house and would like to pay it off and own and then rent it out. I also have to buy a house in Detroit when I arrive and am getting $27,000 for expenses for the move. Do I take down payment money out of my 401k for the new house or do I pay off the old one with money from my 401?? How else can I pay off the old house and still purchase a new one up north. I currently have about $280,000 in my 401.. Any suggesstions??????????
Thanks
gmoney
2007-08-20 14:41:50 · 6 answers · asked by gmoney 1 in Business & Finance ➔ Renting & Real Estate
Leave the 401K alone!!
If you have equity in the old house, use that for a loan to put down on the new house. Or rent it out immediately and use that money to pay the mortgage on it.
Difficult enough to be a landlord much less being so far away. You'll probably need to hire an on-site manager for it.
2007-08-20 14:50:14 · answer #1 · answered by Anonymous · 0⤊ 0⤋
Whatever you do, don't take money from your 401k. You will need to pay about 50% of it in penalties and taxes (30% federal, 10% state, and 10% early withdrawal penalty). Why don't you just keep the house in California and rent it out? Since you only owe about $100,000 on it, you should be able to easily achieve positive cash flow, since you likely have at least $500,000 equity in it. Houses in Detroit are much cheaper. You could probably get into one for a small down payment of $20,000 or so.
2007-08-20 21:52:59 · answer #2 · answered by Califrich 6 · 0⤊ 0⤋
Why pay off the old one at all. You have a low mortgage rate and if you rent you can get more or less the amount of your expenses. Why tie up your money in the house when you don't have to, unless you believe the housing market is going to do better than the stock market - seems unlikely.
2007-08-20 21:51:32 · answer #3 · answered by Mike1942f 7 · 0⤊ 0⤋
How's your credit score like? And what price range of a home are you looking into? Do you really want to tap your 401?
John Lopez
realestatemichigan@yahoo.com
www.CurbSideInfo.com
www.MichiganInvestorNetwork.com
2007-08-21 22:07:01 · answer #4 · answered by realestatemichigan 3 · 0⤊ 0⤋
if you take it out too early, you incur fees.
2007-08-20 21:49:29 · answer #5 · answered by Anonymous · 0⤊ 0⤋
SELL EVERYTHING, DEPOSITS ALL the MONEY In MY ACCOUNT, And YOU IT WILL NOT HAVE MORE CONCERNS....
2007-08-20 21:49:01 · answer #6 · answered by Mestre 3 · 0⤊ 2⤋