64dart170
Well-Known Member
Isn't there a $8,000.00 Tax credit right now for home purchase before the end of the year? That would pay you back you're DP right?
My $.02, but check into first ask you're tax guru.
Good Luck!8)
401k Withdrawal for a house?
- Thread starter JR
- Start date
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Isn't there a $8,000.00 Tax credit right now for home purchase before the end of the year? That would pay you back you're DP right?
My $.02, but check into first ask you're tax guru.
Good Luck!8)
pastortom1
Well-Known Member
Nothin' new.......some just won't face the facts..........
Let me ask you a question.......... If your debt ratio was at about 98% or a little higher, who would then loan you money?.........and how long would it be until you completely tanked into a bankruptcy disaster?
This is where we are right now as a world financial player. (the United States, that is). As it is, we have a maximum of 3 years until a total financial doomsday for the dollar, that is IF major disasters or unseen expenditures (like Obama's health care takeover) don't cripple us beforehand.....and if the G-20 carries through with it's plan to replace the dollar as the world "standard" (which, sad to say is their wish at this point), we may have a year or less.
To state that a 401K is a risk free investment is quite a statement, in view of literal trillions lost in the latest crash and burn of the banking, housing and investment sectors. The average loss for 401K's (which is a disputable figure) stands at appx. 35%........some lost as high as 80% of their equity. Unless your 401K is invested in staple commodities (such as certain grains, oil and natural gas for instance) and/or precious metals, you will have very little left to retire on. The dollar will simply not survive. The handwriting is on the wall.
I just rolled part of our "retirement" into a precious metal, and before I took delivery, the market had gained nearly 25%......my gain......in 12 weeks. I can liquidate part of that and reinvest, putting ME in the drivers seat instead of a college boy behind a desk somewhere at an investment firm that manages my banks 401K's.........and doing a generally lousy job at it.
Ben Bernanke knows how to do one thing, and apparently one thing only (unlike his predecessors)......he prints dollars......trillions of them (quite literally, and withou removing equal amounts from the supply). If WE did that, it would be called "counterfeiting"..........When THEY do it, it's called "stimulus". We can't survive at this rate.....it's totally unsustainable. Game over. We need to re-invest, and do it wisely, as some did before the Great Depression. Study it, and draw your own conclusions..but be warned, your 401K's are short lived, and will shortly be the property of the Federal Government. You'll have NO access, and NO say in the matter then, just like with Social Security now. You can't access your SS, can you? Can you borrow against it? Can you "cash it out" ?? Of course not. That's because it is technically a "ponzi" system........meaning that the money received has to pay out existing liabilities.......YOUR money doesn't EXIST, as far as they're concerned. They give it to someone else......YOU only have the "promise" of the Feds that they will make good someday, when you're old and crusty, to give YOU some money too. (the paper money you have in your wallet and in the bank is nothing but a "promise" too....it's a promissory note, worth the paper it's printed on, unless it's spent while the note is "good").
They NEED the wealth behind the 401K's to keep the boat from sinking in 2010......Be forewarned, and don't think a new election cycle will save the day......there's a LOT of time between now and then......anything can happen.
If you can invest your 401K's in real estate, at a good price, it's a far better deal than letting the Feds take it all with no guarantees. If you have land, you have hope and some control...you have some equity, regardless of what the dollar does......the land will STILL being a price, regardless of the "currency" that rules the day....people are kept safe and warm in a home...food is raised on land...water is accessible under the ground...all things that we tend to take for granted. Precious metals are an historical safe haven against devalued currencies too, and will most likely be what we trade in on the streets in the coming few years.....do some research (especially silver)....another great buy for your 401K dollars. Silver has nearly tripled since 1998.
I recently went to a flea market in Florida, and heard a conversation between a vendor and a prospective buyer concerning the lousy economy. The old vendor said, "The only things worth ANYTHING are guns and gold....that's it". I couldn't resist replying with a quick but respectful, "That's baloney....You can't EAT guns or gold....and they won't be using "gold" to buy and sell for the most part during a financial calamity...they'll use silver....much more quick liquidity for regular purchasing". It got real quiet at that booth. There's a LOT to consider here guys.
Bottom line in keeping with the thread, our 401K's are in DANGER. It's time to use'em or most probably lose'em.
Think about it.........and be ready for the "change" that's fast approaching.
Let me ask you a question.......... If your debt ratio was at about 98% or a little higher, who would then loan you money?.........and how long would it be until you completely tanked into a bankruptcy disaster?
This is where we are right now as a world financial player. (the United States, that is). As it is, we have a maximum of 3 years until a total financial doomsday for the dollar, that is IF major disasters or unseen expenditures (like Obama's health care takeover) don't cripple us beforehand.....and if the G-20 carries through with it's plan to replace the dollar as the world "standard" (which, sad to say is their wish at this point), we may have a year or less.
To state that a 401K is a risk free investment is quite a statement, in view of literal trillions lost in the latest crash and burn of the banking, housing and investment sectors. The average loss for 401K's (which is a disputable figure) stands at appx. 35%........some lost as high as 80% of their equity. Unless your 401K is invested in staple commodities (such as certain grains, oil and natural gas for instance) and/or precious metals, you will have very little left to retire on. The dollar will simply not survive. The handwriting is on the wall.
I just rolled part of our "retirement" into a precious metal, and before I took delivery, the market had gained nearly 25%......my gain......in 12 weeks. I can liquidate part of that and reinvest, putting ME in the drivers seat instead of a college boy behind a desk somewhere at an investment firm that manages my banks 401K's.........and doing a generally lousy job at it.
Ben Bernanke knows how to do one thing, and apparently one thing only (unlike his predecessors)......he prints dollars......trillions of them (quite literally, and withou removing equal amounts from the supply). If WE did that, it would be called "counterfeiting"..........When THEY do it, it's called "stimulus". We can't survive at this rate.....it's totally unsustainable. Game over. We need to re-invest, and do it wisely, as some did before the Great Depression. Study it, and draw your own conclusions..but be warned, your 401K's are short lived, and will shortly be the property of the Federal Government. You'll have NO access, and NO say in the matter then, just like with Social Security now. You can't access your SS, can you? Can you borrow against it? Can you "cash it out" ?? Of course not. That's because it is technically a "ponzi" system........meaning that the money received has to pay out existing liabilities.......YOUR money doesn't EXIST, as far as they're concerned. They give it to someone else......YOU only have the "promise" of the Feds that they will make good someday, when you're old and crusty, to give YOU some money too. (the paper money you have in your wallet and in the bank is nothing but a "promise" too....it's a promissory note, worth the paper it's printed on, unless it's spent while the note is "good").
They NEED the wealth behind the 401K's to keep the boat from sinking in 2010......Be forewarned, and don't think a new election cycle will save the day......there's a LOT of time between now and then......anything can happen.
If you can invest your 401K's in real estate, at a good price, it's a far better deal than letting the Feds take it all with no guarantees. If you have land, you have hope and some control...you have some equity, regardless of what the dollar does......the land will STILL being a price, regardless of the "currency" that rules the day....people are kept safe and warm in a home...food is raised on land...water is accessible under the ground...all things that we tend to take for granted. Precious metals are an historical safe haven against devalued currencies too, and will most likely be what we trade in on the streets in the coming few years.....do some research (especially silver)....another great buy for your 401K dollars. Silver has nearly tripled since 1998.
I recently went to a flea market in Florida, and heard a conversation between a vendor and a prospective buyer concerning the lousy economy. The old vendor said, "The only things worth ANYTHING are guns and gold....that's it". I couldn't resist replying with a quick but respectful, "That's baloney....You can't EAT guns or gold....and they won't be using "gold" to buy and sell for the most part during a financial calamity...they'll use silver....much more quick liquidity for regular purchasing". It got real quiet at that booth. There's a LOT to consider here guys.
Bottom line in keeping with the thread, our 401K's are in DANGER. It's time to use'em or most probably lose'em.
Think about it.........and be ready for the "change" that's fast approaching.
JR
Pissed off senior member.
Ok new question who here has bought a foreclosure home and how did it go?
matthon
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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.
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.
tyler_s18
k-member
to the first question i heard a wise man once say you will never get rich from saving money. you will just have money. buying a house is not an asset in my opinion but you have make it into an asset when you sell it. i would say borrow from your 401k or just a loan if you can what makes the most sense and go with it. dave ramsey is a genius with money and so is robert kiyosaki. i learned a lot from his board game cashflow and his books and housing can make a man very rich and wealthy. i think foreclosures would be a good deal if you can find a better one. some are just nasty. good luck either way and if you do buy a house you gotta paint it sublime green again lol
Dave Ramsay WOULD NOT approve of borrowing against a 401K!
I knew this wouldn't draw much, if any response. Did I mention my wife and I don't owe ANYONE ANYTHING? No where in school do we learn to buy only what we can pay for. We start getting credit card apps and don't give it any more thought. My wife and I don't even have a credit card. No need. SAVE for a down payment, then pay off that mortgage as fast as possible. You'd be surprised how many places you can find cash to pay it off.
pastortom1
Well-Known Member
............and by his strict adherence to the status quo of retirement planning, and the vast numbers of folks listening to his advice (as if the world financial structure is not changing and will not change), millions have lost millions.
Unnecessarily.
......and millions more will lose as the dollar comes to it's demise. It also strikes me that none of us knows if he/she will be alive tomorrow, but we stash as much as we can against our old age, when what we save continues to lose value........the dollar has lost 37% of it's value since 2000.........profits and losses are all subjective I guess, you think?
Hard, tangible assets and true liquidity will hedge against a collapse. Not a 401K.
Hard, tangible assets and a 401K, amongst other investments add up to a diverse portfolio.
Yes, we might die tomorrow, actuarial tables, of course, have us sticking around for a while. (I hope so, I need about forever to finish my Duster!) The security of various investments helps me enjoy each day much more.
I think we're borderline hijackers! Scamp, save your money!
wirenut
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Consult with two people that you know and respect that have done well financialy, even better if they have done well with property. weigh the advice, run the numbers they dont lie and make a decision. It wont be the end of the world no matter what you decide. I have found that what seems like a huge amount of money at one point in my life was not at a latter point. You will make bad decisions in life and it will be fine But you make the decision! Dont trust the banker, dont trust the real estate agent, And don't ever trust a man named Shafi Keisler!
375inStroke
Well-Known Member
You get double taxed that way. You pay it back with after tax dollars, and are taxed again when you withdraw it.
C130 Chief
Mechanical Genius
You would do well to consult a Certified Financial Planner. A sit-down with a professional who can put actual dollars amounts against your options might be an eye opener.
If your 401K is like mine, it is just now beginning to recover. My property is down about 20% from 2 years ago and holding steady. (Good thing I didn't retire and sell my house last summer.) The typical rate of growth in a 401K has your money doubling in value every 7 years due to compounding interest. So, if you work another 28 years, the $10,000 you take out now will be $160,000 you don't have down the road. Property values are more dependent on local economies, but also trend upwards over time. Both stocks and real estate have been and will continue to be good long term investments. Which is better? Good question.
My gut instincts would be to leave your 401K alone (or throw more money at it to reap the gains in it's recovery) and seek other means to finance your down payment. It's a buyers market out there, just read the fine print. Better yet, get professional advice.
If your 401K is like mine, it is just now beginning to recover. My property is down about 20% from 2 years ago and holding steady. (Good thing I didn't retire and sell my house last summer.) The typical rate of growth in a 401K has your money doubling in value every 7 years due to compounding interest. So, if you work another 28 years, the $10,000 you take out now will be $160,000 you don't have down the road. Property values are more dependent on local economies, but also trend upwards over time. Both stocks and real estate have been and will continue to be good long term investments. Which is better? Good question.
My gut instincts would be to leave your 401K alone (or throw more money at it to reap the gains in it's recovery) and seek other means to finance your down payment. It's a buyers market out there, just read the fine print. Better yet, get professional advice.
kanders
Well-Known Member
You guys south of the border are lucky to get tax credits for first time home purchases, here in the great white north we get squat. Also I heard that you get to use mortgage payments as personal deductions against your income taxes (true or false ?) In my opinion, tax implications aside, if I would have put money into RRSP's (same as 401K) instead of investing in my first home then susequent others (playing the real estate market over the years) I might have 100K saved rather than a paid off house worth 10 times that. Real estate always goes up in the long run so long as you're confident you can always manage the payments even in tough times. Don't get me wrong, saving in a retirement plan is a must (especially the tax benefits) but for me, if you're young, get a place of your own while the prices are down first. Start affordable, work your way up. Good luck. Kev
1967DartGT
Well-Known Member
I guess I need to clarify what I meant about a 401k being a risk free investment. Yes there is risk in any investment, but my 401k has an employer matched contribution. What other investment gives me a 100% return on my investment as soon as I deposit it? I also have the ability to control whether my money is invested in high risk stocks, bonds, real estate, etc, etc. I can choose the amount of risk that I am willing to handle. If I lost my job tomorrow and couldn't pay my mortgage, I would loose my house and all the equity I have in it but I would still have my 401k.
And sure the economy took a downturn but it is already starting to show signs of recovery. I have confidence that when I retire in 25 years the economy will have improved and my 401K will still be there. I'm thinking long term investment not trying to turn a quick buck. Patience.
I'm sorry that I won't buy into the hype put out by precious metals snake oil salesmen betting on our country's failure (I'm waiting for the gold bubble to burst just like the tech bubble and the housing bubble did ... it's all speculation driven by fear and greed). I'm also sorry that I cannot be so cynical as some who choose to belive that we are in store for total financial collapse. I did not choose to immigrate to the US just to bet on its failure.
And sure the economy took a downturn but it is already starting to show signs of recovery. I have confidence that when I retire in 25 years the economy will have improved and my 401K will still be there. I'm thinking long term investment not trying to turn a quick buck. Patience.
I'm sorry that I won't buy into the hype put out by precious metals snake oil salesmen betting on our country's failure (I'm waiting for the gold bubble to burst just like the tech bubble and the housing bubble did ... it's all speculation driven by fear and greed). I'm also sorry that I cannot be so cynical as some who choose to belive that we are in store for total financial collapse. I did not choose to immigrate to the US just to bet on its failure.
Buy a house JR......Nothing like a place of your own. :home:
The lending rules have changed alot over the past couple of years. Any chance you could "borrow" the downpayment $$ from a family member or trusted friend and "show" it as a gift for the lender?
If you can avoid touching your 401K, it would save you some $$ in the long haul. JMO
Good luck to you & Nikki....:cheers:
The lending rules have changed alot over the past couple of years. Any chance you could "borrow" the downpayment $$ from a family member or trusted friend and "show" it as a gift for the lender?
If you can avoid touching your 401K, it would save you some $$ in the long haul. JMO
Good luck to you & Nikki....:cheers:
matthon
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You get double taxed that way. You pay it back with after tax dollars, and are taxed again when you withdraw it.
Loans are paid back with before tax dollars, usually deducted from your paycheck before you even get it.
If a loan is paid back from after tax dollars, typically the plan you borrowed the money from is outside your employer plan, for example an annuity. But the loan is not considered a distribution from the plan, so the loan money you received was money that you were not taxed on. If you default on the loan, that is when the IRS considers the loan a distribution and it becomes taxable. If you then pay the loan back, the company that issued the annuity has to keep track of the payments you made after the default and they cannot tax you on that amount later.
Also I heard that you get to use mortgage payments as personal deductions against your income taxes (true or false ?)
The interest paid is deductable, and since the initial mortgage payments are mostly interest, the is more of a tax benefit for the first half of the mortgage term.
Loans are paid back with before tax dollars, usually deducted from your paycheck before you even get it.
If a loan is paid back from after tax dollars, typically the plan you borrowed the money from is outside your employer plan, for example an annuity. But the loan is not considered a distribution from the plan, so the loan money you received was money that you were not taxed on. If you default on the loan, that is when the IRS considers the loan a distribution and it becomes taxable. If you then pay the loan back, the company that issued the annuity has to keep track of the payments you made after the default and they cannot tax you on that amount later.
Also I heard that you get to use mortgage payments as personal deductions against your income taxes (true or false ?)
The interest paid is deductable, and since the initial mortgage payments are mostly interest, the is more of a tax benefit for the first half of the mortgage term.
Been watching this thread for a while and thought I'd chime in, even though I'm Canadian and our version of a 401K is called RRSP. Same idea, some rules are different, but the way it works is you put in your contributions, which become tax sheltered and grow tax sheltered. Contribute during you high income earning years and withdraw in your retirement, presumably at a lower tax rate.
My reality is that growth in my plan has pretty much flatlined over the last 15 years. Sure, you have the occasional 20% per year gainer, but that is offset by the high tech bubbles that burst, the market collapses, the money losing labour sponsered funds, etc. All this is watched over by your investment advisor who has a better house and a nicer car than you do. I also have considerable investment in my employer's stocks which have been up and down, but are pretty much valued at the same they were 5 years ago. My broker tells me I'm one of the lucky ones.
As to a house, they are an investment just like any other. The housing market tanked due to bad loan making policy, not because houses became any cheaper to build, thus it is a good time to buy housing. Bottom line, everyone needs somewhere to live and a house is an investment you can live in. Canada did not experience the housing crisis to the extent that the US did, but while my investments have flatlined over the last 15 years, house prices have tripled.
There are some good strategies regarding tax planning and I've always been envious of the American policy of allowing your interest payments to be tax deductible. Not the same in Kanuckistan. Buy the house and good luck.
My reality is that growth in my plan has pretty much flatlined over the last 15 years. Sure, you have the occasional 20% per year gainer, but that is offset by the high tech bubbles that burst, the market collapses, the money losing labour sponsered funds, etc. All this is watched over by your investment advisor who has a better house and a nicer car than you do. I also have considerable investment in my employer's stocks which have been up and down, but are pretty much valued at the same they were 5 years ago. My broker tells me I'm one of the lucky ones.
As to a house, they are an investment just like any other. The housing market tanked due to bad loan making policy, not because houses became any cheaper to build, thus it is a good time to buy housing. Bottom line, everyone needs somewhere to live and a house is an investment you can live in. Canada did not experience the housing crisis to the extent that the US did, but while my investments have flatlined over the last 15 years, house prices have tripled.
There are some good strategies regarding tax planning and I've always been envious of the American policy of allowing your interest payments to be tax deductible. Not the same in Kanuckistan. Buy the house and good luck.
pastortom1
Well-Known Member
Snake oil salesmen? Cynicism? Really?
Those who invested in precious metals, rolling out some of their 401K and IRA holdings, have increased their retirement funds by nearly 400% over the last decade.......and those who have taken control over their own funds, backing them with stocks based on precious metals or natural gas (for 2 very quick examples) have seen gains beyond that mark.....and it's not a bubble. Precious metals fluctuate, but when "paper money" fails, precious metals HOLD their VALUE regardless of inflation.
Now, if you think thousands of years of proven history boils down to "snake oil", just WHO is being cynical?
Cynicism has NOTHING to do with the G-20 planning to soon replace the dollar as the standard......it's gonna happen. It has nothing to do with the fact that EVERY nation who has increased their debt spending beyond their GDP (the US owes appx 120 trillion, and our gross GDP is around 15 trillion) has financially COLLAPSED.
It's pretty basic mathematics, proven by history, and being warned about NOW by all nations in power.
THAT, my friend, is not cynicism.......and the ones telling us to take some cover are trying to help us, NOT sell us snake oil. The US will survive, but it was those who saw the warning signs and took simple steps to prepare for what was coming that actually rebuilt the nation in the 30's......the same will hold true in the future.
1967DartGT
Well-Known Member
Sorry pastortom1, didn't mean to get under your skin - lol. In my opinion, gold is just another investment that has outpaced stocks in some time periods and underpaced stocks in other time periods. I'm glad you have been able to profit from your recent decision to invest in gold. It's my hope that you are wrong about the impending economic collapse ... only time will tell.
And JR, you asked about investing in a house with your 401k. If you look at long term return on investment, stocks usually win. Check out http://efinancedirectory.com/articl..._Instead_of_a_House_Will_Make_You_Richer.html . It gives a general overview of past performance over the last 100 years or so. I'm not a financial planner so make sure you consult a professional before you make any decisions on this.
And JR, you asked about investing in a house with your 401k. If you look at long term return on investment, stocks usually win. Check out http://efinancedirectory.com/articl..._Instead_of_a_House_Will_Make_You_Richer.html . It gives a general overview of past performance over the last 100 years or so. I'm not a financial planner so make sure you consult a professional before you make any decisions on this.
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