Down payment vs reitrement fund - PeachParts Mercedes-Benz Forum

spdrun · #1 03-19-2013, 11:39 AM

Quote:

Originally Posted by David Wilson

If you're speaking of a 401, most of them allow you to borrow money to purchase your principle residence. The money would have to be paid back to the fund or you will be taxed and penalized.
This is a useful tool to get into a house. But 30 years is too long. Unless you plan on renting it out, try to find a good 15 year loan.
Or just leave your retirement money alone! You young guys may not realize that you are on a lonely island as far as your retirement goes. No more company pensions. Big business changed the playing field with the use of the 401.
Good luck to you.

Why wouldn't you WANT to have the option of renting it out? You can always pay off a 15-yr loan early if that floats your boat.

David Wilson · #2 03-19-2013, 11:54 AM

Quote:

Originally Posted by spdrun

Why wouldn't you WANT to have the option of renting it out? You can always pay off a 15-yr loan early if that floats your boat.

Most people that buy property to rent opt for the longer term loans to keep the payments smaller. They're not looking to pay off the property, they're looking to maximize the monthly income.
Yes, the loan can be paid off early, but the interest rate for the 15 will always be less than the 30. Someone that plans on staying in the house for the duration of the loan will always come out ahead with a 15.