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Should I Take 300k from TSP for House or 8% Mortgage?
When it comes to buying a house, one of the biggest decisions you’ll have to make is how to finance it. With so many options available, it can be overwhelming to figure out the best way to go about it. One common dilemma that many people face is whether to use funds from their Thrift Savings Plan (TSP) or take out a mortgage with an 8% interest rate.
First, let’s take a closer look at using funds from your TSP to buy a house. The TSP is a retirement savings plan for federal employees and members of the uniformed services. It allows individuals to save for retirement through a combination of traditional and Roth contributions, as well as a choice of investment options. While the TSP does allow for loans and withdrawals for specific purposes, including purchasing a primary residence, it’s important to consider the implications of tapping into these funds.
One major advantage of using TSP funds for a house purchase is that you can access the money without having to pay taxes or penalties as long as it’s considered a residential loan that meets certain criteria. Additionally, by taking a loan from your TSP, you are essentially borrowing money from yourself and paying yourself back with interest, rather than paying interest to a lender.
On the other hand, if you choose to take out a mortgage with an 8% interest rate, you’ll need to consider the long-term impact on your finances. While an 8% interest rate may seem high compared to current market rates, it’s important to consider the overall cost of the mortgage, including points, fees, and the potential tax benefits. Additionally, you’ll need to assess whether you can comfortably afford the monthly payments and if the 8% interest rate is competitive based on your creditworthiness and the current lending environment.
Ultimately, the decision of whether to take 300k from the TSP for a house or secure an 8% mortgage will depend on your individual financial situation, goals, and risk tolerance. It’s crucial to carefully weigh the pros and cons of each option and consult with a financial advisor to ensure you’re making a well-informed decision.
In conclusion, the decision to use TSP funds for a house purchase or take out an 8% mortgage is a significant financial choice with potential long-term implications. It’s essential to thoroughly evaluate your options, consider the associated costs and benefits, and seek professional guidance to make the best decision for your unique circumstances. Ultimately, the goal is to make a decision that aligns with your financial objectives and sets you up for success in the long run.
I wonder at what % is this true. I have 80k left on my house but only 258k in my thrift with a year to go. 4% interest
I'm assuming a Primary Residence loan thru TSP is out of the question? Because that would be my go-to right off the bat.
At 67 shouldn't a person already have a paid off house to sell to help finance the retirement home?
Didn't watch video but last I checked you can only take 50k from tsp for purchase of a primary residence so this video is not applicable.
Impossible to give a good advice without knowing how much income the person has coming in monthly and is it a property to sell. Is the TSP making a difference in the monthly spending. Just not enough info.
Obviously the mortgage. You can refi it after they crash the economy and out rates back at 2%
From my experience, if you have to worry that much about taxes, etc, then you did not plan and save for retirement very well.
My next question, that amount, how long have you worked for the federal government?
Stay with 8% mortgage, no questions! And keep your TSP at 100% C Fund forever.
Can't you take a loan out against your tsp at a much lower rate? I seem to remember seeing that as an option. a few years ago, when it was 3-4%, I seem to remember the tsp loan being 1.8% or something like that. Am I misremembering? I wonder what the rate is now
Had about 74K left on the mortgage 2 yrs ago. Took out 37K each year from 401K past 2 yrs. Only owe 5K left on mortgage. Going to retire 12/31/23. CC’s all paid and only $474 a month on a 20K car payment. Will double the payments and knock it out in 2yrs.
Thank you, we are trying to figure this out. We needed to take some out last year and the taxes were absolutely brutal
Was hoping to see a little excel work or whiteboard work to go through the options. I know you wanted to keep the video short. Great tidbit on the Medicare side being tied to income. Thank you for that. Wealth management (Financial Planner to make money and Tax Advisor to keep money) is something I need to keep studying. Thanks for addressing different concerns with lump sum withdrawals.
Do you have a advisory service?
Great advice. It's also not an either-or decision. Consider taking less out and combining it with a smaller mortgage
Question 500.000 in 401k. How difficult would it be 2 convert maybe 100.000 in2 a roth.Would that be a good option.
Have you heard anything about the Biden Regime seizing our TSP funds for government use?
I know a lot of federal employees that wish they had 300K
I'm first, take it all out and spend like a drunken sailor. I am not a financial advisor.