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    MissyPfiz's Avatar
    MissyPfiz Posts: 1, Reputation: 1
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    #1

    Jun 13, 2007, 01:21 PM
    Loan against 401K
    Hi
    I found a property that I want to invest in, it's a foreclosure, I want to fix it up and maybe retire too it, I have a home with a small mortgage, and I have some savings for vacations and emergency's, I think the home I'm looking at might have to be paid in cash, $20,000. I have Est: $135,000. In my 401K and pay in 13% of my pay, My Question is would it be best for me to borrow against my 401K and lower my % to 8% so that there is no change in my finances? and pay back the loan with the 5%. I am open to more ideals.
    Missy
    ebaines's Avatar
    ebaines Posts: 12,132, Reputation: 1307
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    #2

    Jun 19, 2007, 09:19 AM
    If you take a loan against your 401(k) you are not allowed to contribute any more to the 401(k) until the loan is paid back.

    I think you're better off getting a mortgage on the new property, or perhaps a home equity loan against your current property. That way you can continue to invest in your 401(k) and not short-change your retirement funding, and you also get the interest deduction on your taxes. In general, you should borrow from you 401(k) only as a last resort.

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