Should You Get a Loan From Your 401k?

Should You Get a Loan From Your 401k?

Broker | Owner | Mortgage Consultant
Josh Lewis
Published on August 6, 2021

Should You Get a Loan From Your 401k?

Should you borrow money from your 401k to keep mortgage payments down?.
 

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Should I borrow from my 401k to keep mortgage payments down?

Verify your mortgage eligibility (Jan 21st, 2022)

Something to keep in mind is that if you’re taking a loan from your 401k, it's not the same as making a withdrawal because you'd be taxed on a withdrawal. Since you're taking a loan from your retirement savings, you'll be repaying yourself.

Money is often automatically taken out of your paycheck and put into your 401k, so you can opt to just reduce the amount taken out of it. Then you could use the money that would have gone to your 401k for a down payment. However, this method reduces the amount of money you're putting into your savings. Instead, I recommend trying to get the best loan you can with the amount of money you have available.

Everything being equal, I don’t think it’s worth it to subsidize the payment by pulling money from your 401k. However, if you’re looking to However, if you're looking to put a down payment on a house using money from your 401k, it might be worth it. That's definitely better than remaining a renter while home values go up $10,000 to $20,000 every year.

If you have any questions, please feel free to reach out to us.

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Broker | Owner | Mortgage Consultant
Josh Lewis Broker | Owner | Mortgage Consultant
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