“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.
Stop Wondering What Your Budget Is & Get Pre-Approved!
Getiing pre-approved will tell you how much home you can afford, can help you move faster, and with greater confidence, in today’s markets.
Watch The Video: 200 Ronkonkoma Avenue, Lake Ronkonkoma
Great business opportunity close to Ronkonkoma Hub and LIRR Station!
Watch The Video: 59 Oakwood Drive, Shirley
Newly renovated Cape style home!
Watch The Video: 128 Holiday Boulevard, Center Moriches
Mint 3 bedroom, 2 bath Holiday Beach Cape!
Just Listed! 59 Oakwood Drive, Shirley
Newly renovated, 3 bedroom Cape. Turnkey and ready for you!
Nearly 6 Million People Can Now Cut Their Mortgage Payments With Refinancing
5.9 million people can potentially save money by refinancing.