Updated over 9 years ago on . Most recent reply
Borrow from 401k?
So my husband and I have a little chunk of money in our 401k as well as some money saved. We plan to house hack our first purchase with the BRRRR method. Should we borrow from our 401k to make up the rest of the down payment? We are sooooo over renting and need to purchase when the lease is up. I've never touched that money but from what I understand there are penalties. Any advice would be great.
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#5 Investor Mindset Contributor
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#5 Investor Mindset Contributor
- Investor
- Greenville, SC
401k loans used to purchase your primary residence amortize over 15 years, not 5. Your plan provider can confirm whether or not it matters as a duplex.
One technique for starting investing is staying as a renter and taking advantage of primary residence financing and other benefits, just like your potential duplex here (15 year 401k loan, easy insurance, FHA loan, etc.) and then you do something similar again with property #2 (even if you don't plan to leave property #1). The first property takes an eternity to figure out...the rest, not so much. Good luck.