Thinking about dipping into your 401K to buy a home? 🏡 It might seem like a quick solution, but let’s weigh the pros and cons first:
Pros:
âś… Quick access to funds for your down payment
âś… Could help you secure your dream home sooner
Cons:
❌ Potential penalties and taxes
❌ Could impact your retirement savings
But here’s the good news—you can avoid penalties and taxes if you borrow against your 401K instead of withdrawing it. It’s all about making the right move for your future.
Another option is to take advantage of the first-time homebuyer exception. If you qualify as a first-time homebuyer, you can withdraw up to $10,000 from your 401K penalty-free (though you’ll still owe income taxes on the amount). This can be a great way to fund your down payment without the usual penalties, as long as it’s your first home or you haven’t owned a home in the past two years.
Let’s chat about what makes sense for you!
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