Tag Archives: 401k

Realtor Nation w/ Ian Hoover (Podcast): Special Guest Doug Raible, President of The Sterling Heights Financial Group

DHREA 23/03/2019

Doug Raible, President of The Sterling Heights Financial Group, sits down with Ian to discuss the financial world and how it can impact Realtors!

Network with over 650 Real Estate Investors! Join Alex Deacon’s Real Estate Networking Group on MeetUp.com, and be one of the first to receive updates on upcoming events!

Alex Deacon Real Estate Networking Workshops

Carnegie, PA
655 Members

Learn investing from a local expert with a vast amount of experience in the Pittsburgh market. Alex started investing in 1993. We will review hands on examples, analysis, and …

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Join Alex Deacon’s Pittsburgh Landlord Group and be the first to receive updates on our monthly networking meetings!

Pittsburgh Landlord Group

Carnegie, PA
122 Members

This is a great venue for Real estate investors, real estate agents and property managers to expand your knowledge and to help others in the field of being a landlord. We will…

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#TaraMTG Tuesdays: Should I Use My 401(K) to Pay off My Mortgage?

DHREA 24/04/2018

Be sure to contact Tara Mortgage Services with your questions!

If you have a large 401 (k) plan but aren’t quite near retiring age, you may be considering using part of it to pay off your mortgage.

Seems like a good idea, but is it?

There is no “right” answer. Factors like how much you owe on your mortgage and your ability to pay back the amount you “borrowed” can affect your outcome. Just like any other financial decision, your best option is to find out the facts and weigh your options.

Read on to learn the facts about paying off your mortgage with your retirement fund.

What is a 401 (k)?

401 (k) retirement plans offered by your employer. They’re meant to help you save for retirement on a tax-deferred basis. Your employer will also contribute to your savings. Although the money in there belongs to you, penalties will apply if you use your 401 (k) to pay off your mortgage.

To access the money in your 401 (k), you’ll need to move, or roll over, the funds from your employers plan into an Individual Retirement Account (IRA).

401(k) Rollover Penalties

You won’t have any penalties if you roll over your 401(k) into another authorized retirement account. However, if you’re younger than 59 1/2 and use the money to pay down your mortgage, these funds are now considered income and will have penalties.

In addition to the tax implications of extra income, you’ll also have a 10% penalty for withdrawing early from your 401(k).

Reduced Return on Investment

When you withdraw money from your 401 (K), you also reduce the amount it earns in interest. Taking out a few thousand may not affect the earning potential much, but withdrawing tens or hundreds of thousands of dollars can mean a significant reduction in your interest gains.

Some think that the home’s appreciation will make up for the loss, but this may not be true. Although home values are on an upward trend, investing your retirement in your home may be too risky.

Equity For Retirement

Buying property is still one of the best investments you can make, but when considering your retirement, your 401 (k) is more fluid. Remember, the purpose of your 401 (k) is to help you pay for everyday needs during retirement. That’s why makes more sense to use your 401 (k) savings rather than your equity savings for retirement.

Here’s another thing to consider: The cost of paying off a mortgage with favorable terms is relatively cheap when compared to the paying the penalties from an early 401 (k) withdrawal.

The Refinancing Solution

Although the final decision is yours, we often advise against using your retirement for paying down your mortgage –especially since there are alternatives!

You can lower your monthly payments by refinancing your mortgage to a better term. Or maybe you want to pay off your loan faster by getting a 15-year loan –either way, you win! You’ll lock in a great rate plus keep all of your retirement money.

Here’s another bonus: the money you save through refinancing can be applied toward growing your 401(k).

 

Visit our affiliates!

MACE Property Management: www.PittsburghPropertyManagement.com

Tara Mortgage Services, LLC: www.Tara-MTG.net

HDH Settlement Services, LLC: www.HDHTitle.com

Burkhead Insurance Services: Burkhead.Insure

Bin There Dump That: www.PittsburghDumpsterRental.com

 

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