Thinking About Using Your 401(k) To Buy a Home?
For Buyers Laura Miller Edwards Realty Group November 9, 2023
For Buyers Laura Miller Edwards Realty Group November 9, 2023
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 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.”
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:
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.”
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.
This blog post previously appeared on https://www.simplifyingthemarket.com/en/2023/11/08/thinking-about-using-your-401k-to-buy-a-home?a=106260-312309902871c1f0d820820f58bf8fde. The information contained, and the opinions expressed, in this article are not intended to be construed as investment advice. Keeping Current Matters, Inc. and the Laura Miller Edwards Realty Group do not guarantee or warrant the accuracy or completeness of the information or opinions contained herein. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. Keeping Current Matters, Inc. and the Laura Miller Edwards Realty Group will not be liable for any loss or damage caused by your reliance on the information or opinions contained herein.
Stay up to date on the latest real estate trends.
Home Buying
If you’re planning on buying a home, getting pre-approved for a mortgage should be one of the first things on your to-do list.
Home Equity
As home values rise, so does your net worth. And, if you’ve been in your house for a few years (or longer), there’s a good chance you’re sitting on a pile of equity — … Read more
For Sellers
Here are a few quick FAQs that can help you decide how much you should prioritize staging as you prep for your move.
Agent Value
The automated estimates you’re seeing online often miss key details that affect the true market value of your home.
Pricing
You may be wondering if home prices are going to crash. But experts agree that's not what's in the cards – and here's why.
Selling Tips
Most sellers complete at least minor repairs when selling their house. But sometimes life gets in the way and that’s just not possible.
For Sellers
Historically, the number of homes for sale tends to drop during the cooler months – and that means buyers have fewer options to choose from.
Mortgage Rates
If you’ve been keeping an eye on mortgage rates lately, you might feel like you’re on a roller coaster ride. So, what’s driving this constant change?
Housing Inventory
If you’re debating whether or not you want to sell right now, it might be because you’ve got some unanswered questions.
Get assistance in determining current property value, crafting a competitive offer, writing and negotiating a contract, and much more. Contact us today.