Heya. If you have two 401Ks, can you use 50% of both of them up to $50K each, or is it $50K total?
Don’t you have to pay taxes if you do that? I know you can count 50% of the value towards your reserves.
I thought for first time homebuyer, you could borrow against 401K without tax penalty.
You can always borrow without paying taxes or penalty if you’re still with that employer. Borrowing is dangerous. I had a coworker borrow then get laid off. He owed the loan balance within 30 or 90 days (can’t remeber which) or he’d have to pay the taxes and penalty for early withdrawal. He was crazy stressed over it.
I thought you could borrow if you’d left the employer as well, and that said rule didn’t apply.
I guess for a duplex, I’d be ok with 401K being reserve. Would just mean low-cash balance.
I believe if you leave the employer it is then treated like a withdrawal so you either have to pay back the loan immediately or you have to pay the taxes and penalties.
Withdrawal from an IRA is better but you are capped at $10K. I tried to take money from my Roth IRA when I bought my house but the account wasn’t opened for five years so it didn’t meet the requirement.
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Crap.
Set up an 401k for your own company. If you don’t have one just create one. If you got laid off, come up with the money somehow and repay the loan, roll the 401k over, immediately take out a loan from the new 401k.
We did it. Total 50k. No minimal payments, as long as you pay within 5 yrs. Yes, you paying % but you paing it to yourself.
Correct me if i wrong or misunderstood our retirement company
And looks like 50k from 401 do not go to your DTI (according to mortgage comp)
401k is your money. You can borrow 50% or 50k whichever is less. No taxes, but 5 year amortization applied. First time home buyer can request 10 year amortization, but left to the provider to accept with documentation!
Anything you borrow from m 401k is not accounted for your DTI
I borrowed two or three times, but paid within 3-5 months. This is one of the best options!!!
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What’s the procedure to get loan from 401k? Do you go to the brokerage for the loan? Or need to go to your employer HR to apply?
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Just look out your 401k broker site, they may have loan option ( this is loan ).
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Ask your broker first. In general you will able to get money if you are " in contact" already. But maybe there are some kind of exceptions.
Is 401k loan only for primary home purchase? And the maximum is 50k? That won’t help much in BA.
BofA does not even count 401k and IRA in the reserve since you can’t access until certain age
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You won’t believe but it helped us a lot.
NO offence to BoA lovers but BoA sucks all the way.
In my expierence lenders from Tx are super. We’ve tryed all “best” and “well connected and recommended” local lenders… but no one culd help us.
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Who is TX lender?
My mortgage broker has been counting 401K as part of the reserve.
$50K towards a mortgage is very significant. The payback in 5 years is definitely something to think carefully about.
The 50k borrow will not be accounted in your DTI ( good for you)
If it is first time primary home , your broker may ask for some documentation ( inquire first ) they consider 10 year amortization instead of 5 year.
50% or 60% Balance 401k will be considered for reserve amount as 40% accounted for tax in case of hardship !
It helped me many times as it is temporary loan type. The max is 50k as per IRS guideline. You can withdraw once a year ( be careful ) only.
Do not withdraw unless you are in contract as you can not withdraw 2nd time in 12 months
I paid back in 2 months, but was blocked withdrawal next 10 months when I need it.
All are IRS rules related to 401k
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