Outside the Box: Should you take a loan from your 401(k)?

by | Sep 9, 2022 | Stock Market

When we moved to Pennsylvania in 1996, I wanted to buy an old house. After months of looking, we found a stone farmhouse close to my new job and in a good school district. There was just one problem: We didn’t know if we could afford it. We hadn’t been able to sell our home in Maryland, so we didn’t have any home equity to bring to the table. When our real-estate agent saw the asking price, she declined to show us the place because it was out of our price range. She wasn’t wrong.

We drove over to look anyway. It was a stone house with big mature trees. A light snowfall made the property look like a Currier & Ives print. Our kids ran around the yard, jumping in the creek out front. We had to drive home to get our 7-year-old son into dry clothes. But in just a few minutes, we’d fallen for the place. From the visit, I got an idea for how we might afford the property. It had a small cottage, separate from the main house, which might provide rental income that we could then use to help cover the mortgage. We still needed a large down payment, however. But I also had an idea for where to get that money. I’d borrow from myself. Read: U.S. gains 315,000 jobs in August. Labor market still strong but shows sign of cooling. First, I ro …

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