House hunting is an exciting time for most people but saving up for the down payment can difficult. If you’ve found the perfect but don’t have enough to put down, you may be tempted to tap into your 401K. But before you do that you should know that there is a serious downside to borrowing from your 401K that could really cost you down the road.
If you borrow from your 401K or have the thoughts of borrowing from there, chances are you may not even be able to afford your dream home. You may need to ask yourself, where is the money really going, can I truly afford this, is there money to be saved from my entertainment budget? If living beyond your potential means doesn’t turn you off or you still are unsure to borrow from your 401K here are 4 reasons you may want to consider:
· ·
If you borrow from your 401K, you will still
need those savings
· · · A 401K loan can compromise your future wealth
· · · You could be penalized for and taxed on early
distributions
· · · Borrowing from your 401K can start a pattern
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