401k Withdrawal for a house?

I bought a foreclosed home, after bidding on quite a few foreclosures.
In a normal sale, you make an offer, the seller agrees, you get a home inspection, and if you find over $1,000 worth of repairs you have the option to walk away, request a reduced price or ask the seller to fix the issues.
With a foreclosure, all of the above applies, but typically the bank will not be fixing anything, and they will just move onto the next offer.

If you need a down payment or closing costs, here is what you need to do:
Borrow the sale price of the house, and an additional amount to cover the closing costs. The total will be your offer.
In the contract stipulate that the seller needs to pay the closing costs.
Nothing out of pocket for you.
The difference in your monthly payment will be a few dollars, and you get to keep your cash.

Your realtor has not suggested this?

Its a buyers market so it should not be an issue. I did it twice when the market was crazy and sellers did not want to be bothered with writing any more checks at closing, and they were fearful that such an offer meant I did not have financing- but I made sure I did and placed a closing date of no more than 2 weeks out, sellers like that.

Make sure you get a fixed rate, not a variable, not a mixed rate, and make sure the realtor is getting paid by a lump sum check. Some realtors or brokers get paid through 'points' (if I remeber correctly, its called points). This means that the interest rate is increased by a percent, a half percent, whatever, and it is not good for you in the long run.

You may hear some people bragging about what a great rate they got, either it was variable and their payment will go up/down over time, or the broker got points and their rate is actually higher.

Find a good home inspector, and become his best friend. Anything he finds wrong with the house is leverage for you to lower your offer, or make sure things are fixed prior to you taking ownership.

As far as the 401k, do not take out money. If you must, take a loan. You do pay yourself back interest, but the funds are out of the market- which is a bad thing, especially right now- you want to be invested for the ride back up. The market has a 20 year swing.

Loans are withdrawals, surrenders, whatever term people want to use- but they are not distributions from the plan, and therefore not taxable (unless you lose your job, then you have to pay it back in a lump sum, if you do not it becomes a distribution from the plan).

Sorry, a little wordy but I hope it helps.