Have you ever wondered if you can use your 401k to help you buy a house- Yep, it turns out you can and you’ll learn how to use your 401k to buy a house in this video along with what you should consider to know if it’s the right choice for you!
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1. How to use your 401k to buy a house!
2. The pros and cons of using 401k for down payment on your new home!
3. 401k Home Loan rules!
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📒 Show Notes 📒
0:51 – What is a 401k?
3:00 – How Much Can You Borrow from a 401k for Home Down Payment?
3:18 – The Pros of Using 401k for Down Payment on Your New House!
4:21 – Is it a Good Idea to Use 401k to Buy a House? – The wisdom & considerations of using 401k for down payment first time home buyer!
6:14 – The Cons of Using 401k to Buy a House!
7:36 – When Using Your 401k to Buy a Home Is a Bad Idea!
8:42 – Consider the Your Mortgage Options with the Low & No Down Payment Options. -Every program has it’s own pros and cons so be sure get all the facts to make a well-informed decision that is right for you!
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Andrew Finney Trusted Real Estate Advisor/ USMC Veteran S.0173260
www.andrewfinneyteam.com
King Realty Group 6955 N. Durango Drive
Suite 1004
Las Vegas, NV 89149
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At the time of production, Andrew Finney, S.0173260, is a real estate salesperson with King Realty Group (KRG) in Las Vegas, NV. Andrew’s videos are his own and do not necessarily represent the views and/ or opinions of KRG. The purpose of Andrew’s videos is to educate you and help you make sense of the real estate process. I am not a CPA, attorney, insurance, contractor, lender, or financial advisor. If you have questions about home loans, real estate, taxes, financial advice, real estate law, insurance, professional trades, or any other services, you are advised to reach out to the appropriate professional for further counsel about your own unique situation. The content in these videos shall not be construed as tax, legal, insurance, construction, engineering, health & safety, electrical, financial advice, or any other and may be outdated or inaccurate; it is your responsibility to verify all information for yourself. We have taken reasonable steps to check that the information in this video is accurate but we cannot represent that is free from error. Linked items may create a financial benefit for Andrew Finney Team. Any use of other media is by fair-use or license only.
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How to Use Your 401k to Buy a House!
Buying a house is a significant milestone in many people’s lives, and for some, it can also be a financial challenge. However, if you have a 401k retirement account, you may have an option to tap into those funds to help with the purchase of your home. Here are some tips on how to use your 401k to buy a house.
First, it’s essential to understand the rules and regulations regarding using a 401k for a home purchase. Many people don’t realize that it’s possible to use their retirement savings to buy a house. The IRS allows for individuals to take a loan against their 401k for certain home-related expenses, including the purchase of a primary residence.
However, there are some strict guidelines and limitations surrounding this option. For example, the maximum loan amount is typically 50% of the vested balance in the account or $50,000, whichever is less. Additionally, the loan must be repaid within five years, and the interest rate is usually set at the prime rate plus 1-2%.
It’s also important to note that withdrawing money from your 401k for a home purchase is different from taking out a loan. When you withdraw funds, you will likely face early withdrawal penalties and be subject to income tax on the amount taken out. However, taking out a loan does not have the same tax implications, as long as you follow the repayment terms.
Before deciding to use your 401k for a home purchase, it’s essential to consider the potential drawbacks. By taking a loan against your retirement account, you may miss out on potential investment gains if the market performs well. Additionally, if you leave your job before repaying the loan, you may be required to pay back the remaining balance in a short period, or face penalties and taxes.
If you still believe that using your 401k to buy a house is the right decision for you, it’s crucial to weigh the pros and cons carefully. Consider speaking with a financial advisor to understand the potential impact on your retirement savings and to ensure you are making the best decision for your long-term financial well-being.
Finally, remember that using your 401k for a home purchase is just one option among many. Before tapping into your retirement savings, consider other alternatives, such as saving for a down payment through traditional means, securing a mortgage, or exploring homebuyer assistance programs.
In conclusion, using your 401k to buy a house can be a viable option for some people, but it’s essential to understand the rules and implications before making any decisions. By carefully weighing the potential benefits and drawbacks, and seeking advice from a financial professional, you can make an informed choice about whether using your 401k for a home purchase is the right move for you.
I read that if you use it for buying your first home, you don’t have to pay it back. Is that true?
Can you use a 401k from a previous employer? And can you use the 401k to buy and rent?
Oh, so you're fucked either way and the money isn't really yours.
Thank you for the info as a person in my late 20s this is info they didn’t teach in the public school system and it’s needed
Someone enlighten me. I’m 30 years old and I’m considering using some of my 401k to buy a house. Most people strongly advise against it but if I’m using it to buy a house, isn’t that probably one of the best ways I could invest that money? I still have decades ahead of me to build up my 401k again, while I’m building equity with the home.
Thank you awesome information
So does borrowing against your 401K effect you PTI? For a FHA?
Thank you so much for covering the penalty for leaving the employer. This is the one that gets me ; in the modern American business world, I don't trust any company enough to believe that my job is secure (not saying they'd fire me, but instead if policy changes or decisions are such that I don't want to represent my company any more and choose to leave). This poses a problem when I was originally contributing the max to my 401k each year. No longer. I'd rather invest that money on my own, first, then pull it out of the markets if I want to buy my first house.
Great video very helpful info. It would be nice if you had a lapel mic and tweaked the audio a bit
Unfortunately this doesn’t help me. I have a paid off house. However, I want to retire early and move overseas. It’s like impossible to get a loan this way. I said I would NEVER touch my 401k,, but I just want the property paid off, and not have to worry. I rather pay the penalty for early withdrawal. Just didn’t want to go this route… but I know in the long run. I would literally be loosing millions. But I’ll still have a decent amount left in it…. Just so many decisions
Does the money still stay in your portfolio while your paying it back or. Do you lose those funds and disrupt the allocation of your 401k?
Great video, great info.
Drop the music and slow down. You're talking so fast because you are familiar with these concepts but most of us are watching because we are not experts on this topic.
Really great informative video ! Thank you
if you can't afford to pay closing and down payment. you're not ready to buy.
Had a job quit that job 10 years later put that 401 k into my Roth can I use that money to buy a house I am a first time buyer?
This background music is so distracting. It doesn't fit the video at all.
I'm a first time homebuyer looking to withdraw from my 401k plan is it possible? And will I be subject to any fees?
Very helpful! Gracias!
Thank you for your service
Any suggestions on top notch realtors in detroit?
5:13 Rent is not always "flushing your money down the toilet." In fact, you can often come out ahead financially by renting instead of buying. When you say renting is flushing your money down the toilet, with no exceptions mentioned, you risk exposing yourself as a slimy realtor looking to scare people into buying a house, regardless of their individual situations.
Like if you think he's not wearing his pants
Is it worth it to use 401 K?
Thanks for the info, I was told by a loan officer that even when putting down 3.5% on an FHA loan, a PMI is still charged a minimum of 7 years regardless of equity due to the FHA loan policy. Any input on this?