“Before you decide to dip into your retirement to buy a home, be sure to consider all possible alternatives and talk with a financial expert.”
Are you dreaming of buying your own home and wondering about how you’ll save for a down payment? You’re not alone. Some people think about tapping into their 401(k) savings to make it happen. But before you decide to dip into your retirement to buy a home, be sure to consider all possible alternatives and talk with a financial expert. Here’s why.
The Numbers May Make It Tempting
The data shows many Americans have saved a considerable amount for retirement (see chart below):
It can be really tempting when you have a lot of money saved up in your 401(k) and you see your dream home on the horizon. But remember, dipping into your retirement savings for a home could cost you a penalty and affect your finances later on. That’s why it’s important to explore all your options when it comes to saving for a down payment and buying a home. As Experian says:
“It’s possible to use funds from your 401(k) to buy a house, but whether you should depends on several factors, including taxes and penalties, how much you’ve already saved and your unique financial circumstances.”
Alternative Ways To Buy a Home
Using your 401(k) is one way to finance a home, but it’s not the only option. Before you decide, consider a couple of other methods, courtesy of Experian:
- FHA Loan: FHA loans allow qualified buyers to put down as little as 3.5% of the home’s price, depending on their credit scores.
- Down Payment Assistance Programs: There are many national and local programs that can help first-time and repeat homebuyers come up with the necessary down payment.
Above All Else, Have a Plan
No matter what route you take to purchase a home, be sure to talk with a financial expert before you do anything. Working with a team of experts to develop a concrete plan prior to starting your journey to homeownership is the key to success. Kelly Palmer, Founder of The Wealthy Parent, says:
“I have seen parents pausing contributions to their retirement plans in favor of affording a larger home often with the hope they can refinance in the future… As long as there is a tangible plan in place to get back to saving for their retirement goals, I encourage families to consider all their options.”
Bottom Line
If you’re still thinking about using your 401(k)-retirement savings for a home down payment, consider all your options and work with a financial professional before you make any decisions.
To view original article, visit Keeping Current Matters.
Home Prices Increase in Every Price Range
If you’re a homeowner thinking of selling, let’s get together to find out how much your home is increasing in value.
Things to Avoid After Applying for a Mortgage
The best advice is to fully disclose and discuss your plans with your loan officer before you do anything financial in nature.
Watch The Video: 43 Marc Drive, Ridge
Well maintained 3 bedroom Ranch located on a quiet block. Features energy saving solar panels and a private backyard with Koi pond.
Watch The Video: 65 North Woods Road, Baiting Hollow
Beautifully kept home located on cul-de-sac on Long Island’s desirable North Fork. Plenty of space for your family – inside and out!
Watch The Video: 15 Carlile Court, Center Moriches
Spacious 5 bedroom Victorian, located on a quiet street in Center Moriches!
6 Graphs Showing the Strength of the Current Housing Market
Is it time for you to get back in the market? Make sure to determine what’s happening in your local market so you are fully informed.