We want to be a “cash buyer” and to get us up to the level of home we hope for, we can take a $50K 401K Hardship Loan, at 5%, or we can be an almost all cash buyer with a small Mortgage for $100K at 4.5%, 10 year Term. What should I consider for each of these? I have a few bullets below.

Area is Austin/Round Rock TX

401K Loan, cash buyer:

Taking money out during a down market really sucks, and we could be paying it back during a time when the market has rebounded, which is a terrible “sell low, buy high” result! Economy could derail enough that I lose my employment, causing an 60 day payback window With the $50K loan, we would be putting almost all of our cash into the deal, along with the 401K funds. Even with $900 per month 401K loan payback, we can squirrel another $800 per month to rebuild cash reserves.

$100K Mortgage, 4.5%, 10 year term (10 years since we retire in ~10 years):

This lets us preserve a small cash reserve, which we have always had We hit the same max offer price point Payment is manageable, even with a 10 year term

Additional note, the 401K loan is a $75 processing fee, the mortgage is a discounted product based on a great deal, but much more than $75, likely around $2000, excluding prepays.

Our current rent is easily manageable if that matters.

submitted by /u/tx_carvana_buyer
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Area is Austin/Round Rock TX 401K Loan, cash buyer: Taking money out during a down market really sucks, and we could be paying it back during a time when the market has rebounded, which is a terrible “sell low, buy high” result! Economy could derail enough that I lose my employment, causing an 60 day payback window With the $50K loan, we would be putting almost all of our cash into the deal, along with the 401K funds. Even with $900 per month 401K loan payback, we can squirrel another $800 per month to rebuild cash reserves. $100K Mortgage, 4.5%, 10 year term (10 years since we retire in ~10 years): This lets us preserve a small cash reserve, which we have always had We hit the same max offer price point Payment is manageable, even with a 10 year term Additional note, the 401K loan is a $75 processing fee, the mortgage is a discounted product based on a great deal, but much more than $75, likely around $2000, excluding prepays. Our current rent is easily manageable if that matters. submitted by /u/tx_carvana_buyer [link] [comments]

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