401K Loan vs. Home Equity Loan
I need $50,000 for a kitchen remodel.
I can get a 401K loan 5 yr term 9.25 interest - total payments add up to 62,000 or so with a monthly payment of roughly $1,050. That payment is is tough on my current budget so I was considering a Home Equity Loan with a longer term.
I know there are a lot of Home Equity Products on the market. I found one from ING that is 8.25%, 25 year term, interest only for the first 10, no early payment penalty. I know it is a dangerous loan but has great flexibility. I could possibly pay $700 a month (more than the minimum interest only payment) making the budget less of a concern. The problem is I am paying ING the interest instead of myself with the 401k loan.
I am not concerned about losing my job. So I am not worried about being stuck with any 10% 401k penalties and additional tax.
So, the question is, what do I do? Should I do a blend part 401k loan and also take out a home equity loan?
Not sure, would love to have your thoughts.
Thanks.