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Posted: **Sun May 14, 2023 3:44 pm**

I decided I'd ask the elders here about financial stuff. I'm about to buy a house and it occurred to me that there's a way to borrow from a 401K to pay a mortgage without a tax penalty. What Google's AI tells me:

There are a few things to keep in mind if you're considering borrowing from your 401(k) to pay off your mortgage:

You will have to pay interest on the loan, which will be deducted from your paycheck.
You will not be able to make additional contributions to your 401(k) until the loan is repaid.
If you leave your job before the loan is repaid, you will have to repay the loan in full within 60 days or the loan will be considered a taxable distribution and you will have to pay taxes and penalties on the amount you borrowed.

Overall, borrowing from your 401(k) to pay off your mortgage can be a good option if you have a high-interest mortgage and you can afford the monthly payments. However, it's important to weigh the pros and cons carefully before making a decision.

Here are some additional things to consider before borrowing from your 401(k):

How much money do you need to borrow?
How long will it take you to repay the loan?
What is the interest rate on the loan?
Can you afford the monthly payments?
What will happen if you lose your job before the loan is repaid?

If you're not sure whether borrowing from your 401(k) is the right decision for you, it's a good idea to talk to a financial advisor.

To me this makes it sound as if I can only do so from my current employer. I've only been working for my current employer for a few months so it looks like I can only borrow a few thousand. My wife might be able to borrow quite a bit more. I thought I'd check here regarding what people think about this option. Given current interest rates are pretty high, I'm tempted to pay off a chunk of the mortgage early in it's life and/or at least pay myself some of that interest.

Posted: **Sun May 14, 2023 4:52 pm**

That isn't something I'd adivse on. I didn't pay off my mortgage until I was ready to retire because the deduction was worth keeping it around. But everyone's in a different boat. I don't even take the advice of my own financial advisor most of the time, and it pisses him off every time that is a good call. So I wouldn't seek advice from people you don't know that well. The only advice I'd try to give there is to either follow someone you have extremely good reason to trust, or become the expert you want to follow. Everyone else wants a chunk of your money.

Posted: **Sun May 14, 2023 6:32 pm**

My advice is to seek advice from someone who is an expert on such matters. Someone who can explain the mathematical implications once you tell them how much you are borrowing, how long it will take to pay it back etc. I think borrowing from a 401K plan requires satisfaction in a much shorter duration than a typical mortgage. In general it is never a good idea to borrow from 401K funds if there is any other option.

Posted: **Sun May 14, 2023 7:02 pm**

I agree getting and advice from an expert is wise, but the goal of having a 401k is to provide as large s retirement nest egg as possible. Using part of this to pay for anything that you can pay another way will reduce your progress to the goal. IOW, what you're proposing should only be done as a LAST RESORT.

Posted: **Mon May 15, 2023 5:31 pm**

**This is not financial advice!!! **

I'd also agree that borrowing against your 401k isn't the best option. One thing I know about regular 401k loans (may or may not apply to borrowing for a mortgage), but if you ever leave your current employer or get fired, you'd have to pay the entire loan balance back in that tax year or have to pay the withdrawal taxes as if it were a disbursement.

and you'd have to check what the rates are currently, but I'd almost wager that the interest rate on that 401k loan isn't much different than mortgage rates... may even be worse

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Borrowing from a 401K to pay a mortgage?

Borrowing from a 401K to pay a mortgage?

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Re: Borrowing from a 401K to pay a mortgage?