Buying a home can be a financial stretch. With soaring home values and rising interest rates, many potential first time home buyers find saving for a down payment increasingly difficult.
For many people, the main source of savings is in the form of a 401k and tapping into this resource for a home purchase is one way to find the down payment necessary to finance a new home; but should you use your 401k to buy a home? Experts are conflicted.
A 401k is a retirement savings plan offered by employers which takes pre-tax earnings and deposits it into an investment account for use in retirement. The money in a 401k account can be accessed by either taking out a loan against the balance or by a straight withdrawal. A withdrawal before the age of 59.5 is also subject to a 10% penalty.
Taking out a loan from a 401k account may be a viable option for potential home buyers. For one thing, a loan from your 401k should not count against your borrowing power. You also don’t need to qualify because you are borrowing from yourself. The amount you can borrow is limited, for example 50% of the balance, and typically must be repaid within 5 years. The other option is a simple withdrawal; the 10% penalty is incurred, but the value is not usually limited.
Saving for a down payment can be challenging. Using your 401k to help may be a great option. Speak with your financial advisor and see if this is the right financial move for you.
Author:Stacey Hawkins Phone: 954-999-8282 Dated: May 27th 2022 Views: 27 About Stacey: ...
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Jennifer grew up in the historic town of Madison in southern Indiana. Jennifer's family always had Real Estate interests. Both her father and grandmother own multiple properties she helped maintain while growing up and her uncle owns a successful Real Estate firm across the river in Nicholasville Kentucky. It was in her blood.
RE/MAX MountainView was a new firm in Gainesville, Virginia and Jennifer was hired as the receptionist. It quickly became apparent she had ambitions and talents well beyond answering telephones. She moved on to bookkeeping and agent hand holding and then to Office Administrative Manager. She earned her Real Estate license in 2001 and began dealing with clients and customers first hand. It was into xicating.
The Real Estate office was sold in 2008 and Jennifer moved to Cincinnati and began working as a Realtor
It's not all work in Cincinnati. There is a new baseball team to root for. There is her daughter's new school to volunteer at. And she is a Field and Suicide Prevention Advocate with the American Foundation for Suicide Prevention where she is very active, volunteering and participating in fund-raising events throughout and the annual trip to Capitol Hill to further the cause.
First and foremost, after family, is client care. Jennifer loves Real Estate. She treats her clients like family, guiding them and helping them to make wise decisions and smoothing all the bumps in the road to home ownership. She says, "The best feeling is seeing their smiling faces when they receive the keys to their new homes."