I have a 401K from a previous job that is sitting doing its thing and has been for the past three or so years; I have a new job now with a different type of retirement plan, and I was lazy and never rolled it over. It’s doing pretty well as far as I can tell; the average rate of return for the past 5 years is 10.12%, and it’s over $50K. I am 31 years old, single, no kids, and I rent an apartment, but I have always wanted to own a home. An opportunity has arisen for me to purchase a home from a family member, and I can give more details if they’re relevant, but the bottom line is, it would be a really great deal, but only if I can use the money from my 401K as a down payment. When I say really great deal, I mean, mortgage, taxes, and insurance would be ~$200 less than I am paying in just rent right now. Standard financial wisdom, as I understand it, says to not touch that money under any circumstances because of the loss of the eventual return, but without using it, I would have a very hard time coming up with any type of reasonable down payment in the near-ish future, and if I retire when I’m 62, I’d like to have a place to hang my hat and no mortgage payment if possible.
I realize that with the purchase of a home, the financial piece is a large part of the conversation, but not the only one. That being said, I’m leery about removing the money because it’s doing pretty well, and should I cash out, I would lose ~$13K in fees and taxes right off the bat not including the additional income tax I’d have to pay on it. On the other hand, I have other retirement investments that, according to my projections, will keep me fed, clothed, and comfortable when I retire, and the payout would allow me to put about 33% down and avoid PMI. I am well and truly on the fence, and would appreciate any input.
Submitted June 30, 2017 at 09:54AM by TheMagicalGobo http://ift.tt/2u6QTSD
