401k loan at 62 (interest rate, credit card, rate, deduction) - Mortgages -Lenders, loans, financing, rates, foreclosures, short-sales, brokers, credit score, deed, lien, refinancing, borrowers - City-Data Forum

whitedogman · 03-30-2011, 08:51 AM

I am 62, have a balance of 14000 left on mortgage. I was thinking of borowing that amount from my 401k for reasons I won't bore you with. any advice?

ShanetheMortgageMan · 03-30-2011, 09:35 AM

What's the interest rate on your 401k loan and what is the interest rate on your mortgage?

piyf · 03-30-2011, 10:55 AM

Don't do it!!!!!!!!!!!!!!!

wrench409 · 04-02-2011, 05:07 PM

Quote:

Originally Posted by danieloneil01

Don't do it!!!!!!!!!!!!!!!

I realize there are tax pitfalls regarding 401k loans should a job be lost and the loss of 401k interest earnings, but even so I considered this about 10 years ago, but didn't follow through with it. We paid our mortgage off the conventional way (extra principal payments regularly).

Why do you say don't do it?

Just curious....

mortimer · 04-03-2011, 11:57 AM

Quote:

Originally Posted by wrench409

Why do you say don't do it?

The better question is :
"Why would you want to do it?"

Your mortgage loan interest is tax deductable. It's not much of a deduction, but it's not nothing.

Your 401k loan doesn't benefit you in any way.

Your debt to the outside goes down and your net assets go down by the same amount.
What could possibly be the benefit of taking a 401k loan for that?

If you were talking about a 21% ( or worse ) credit card debt, we would be having a different conversation.

piyf · 04-03-2011, 04:43 PM

Because your 401k is for retirement not to take a loan against to pay on other loans. Don't take on stupid debt, plain and simple. But in your case just put more towards the principle.

Can we get the ability to remove loans on 401k's by a bill, seriously? I would vote for any person running for President that would be on board with this, unless their name ended with Obama.

mortimer · 04-03-2011, 05:42 PM

Quote:

Originally Posted by danieloneil01

Can we get the ability to remove
loans on 401k's by a bill, seriously?

There is nothing wrong with a 401k loan in the right circumstances.

Suppose someone marries another with large credit card debt of $10,000
or something like that and they don't have a lot of money to spare for
one reason or another. Most credit card debt is in excess of 20% and
some even over 30%. Using 401k money for that as long as the person
is continuing to have the maximum withheld every year is just fine.

What would be better on a bill would be mandatory 401k participation if
available from the employer and if not then mandatory IRA contributions.
As long as you are "dreaming" about tax bills that you wish for ...

coastal chic · 04-05-2011, 05:42 AM

I agree; DON'T DO IT.

Bideshi · 04-05-2011, 05:50 AM

Are you sure you can even take that big a loan? My 401k only allows a max loan of 50k no matter how much the total is in the 401k.

MainerWannabe · 04-08-2011, 10:20 PM

Quote:

Originally Posted by Bideshi

Are you sure you can even take that big a loan? My 401k only allows a max loan of 50k no matter how much the total is in the 401k.

I believe he said $14,000 not $140,000
But anyways, I was thinking about something similar, but in my case I would do it upon retirement, and take out (not a loan) a 80,000 to buy myself a little house somewhere...