Did you know that interest paid on the majority of RV loans is TAX DEDUCTIBLE as a home mortgage interest?
To qualify, the Internal Revenue Service (IRS) has ruled that:
Q: I am considering borrowing half of the value of my 401K account to help make a substantial down payment on a home purchase, or even to pay the entire thing in full. I would then pay myself back with interest at the prime rate. <span style=”fIs this generally a good idea? What are the pros and cons of this approach?
A: In general, I do not believe in borrowing from any retirement account. They are set up to accumulate money for retirement, not to finance current expenses.
Potential tax consequences. If you fail to make the required loan payments, the amount of principal and interest remaining on the loan will be subject to the income tax. If you are under 59 1/2, there also will be a 10% penalty for early withdrawal.
The bottom line:
If you had to use the money in a 401K to scrape together a down payment for a house, and if you could qualify for a mortgage even with the 401K loan payment, then it might make sense to take a 401K loan. If you needed the money to pay a medical bill or college tuition, a loan might make sense.
I would leave the money in the 401K and take a slightly larger mortgage on the house. If the mortgage interest rate is anything near prime, you will come out ahead and the money in your 401K will continue to compound.
Rates and amount financed are determined by credit history. Your actual payments may vary. Plus tax, title and license. See dealer for details.
Fill out the form below, and we will be in touch shortly.
Fill out the form below, and we will be in touch shortly.