401K and home downpayment
Hi Terry,
I’m 23 years old and planning to buy a home within the next 3-5 years. I was wondering if it would be a good idea to borrow from my 401K to either go towards my downpayment or to any necessary immediate repairs? I do have a stable job and contribute a decent amount to my plan. I obviously plan to save outside of my plan to go towards these expenses. I would only borrow from the my 401K to supplement that.
Terry Says
NO! That’s NOT a good idea! Keep saving for a down payment on the home. Then have an equal amount in savings to cover unexpected expenses of home ownership. Only then, can you be comfortable in buying a home.
Some other thoughts — although home ownership is a great thing, at this point you have no idea where career opportunities may be taking you. That’s another good reason to wait.
Also, I’m sure you thought “how does she expect me to save TWICE as much”?? Well, since you’re young and presumably single, this is the perfect time to work TWO jobs, and consider the second one as a savings vehicle. It might not be in your chosen field, but even making an extra hundred dollars a week as a waiter, or car valet, or a similar job could really boost your savings for home ownership!
