Yes, but you should know that you will pay the taxes for it.
If you get a real good deal on your property then yes go for it.

Look at this blog it will help you to learn more about your situation.
I've got most of my answers there as well.

Good Luck.

There are pros and cons to what you plan to do, however it is common now that many young people now find that putting money into a 401k is the only way they can save. If the money that you have is in your 401k, Ruth's answer is a good one. You are not withdrawing the money, you are borrowing it, so you would not have to pay income tax on it, as was mentioned. Also, whoever suggested that the payment has to be included in debt is incorrect. You are paying yourself back, so it is not included. As long as you feel comfortable with the payment, you are fine. Also, the fact that the payments that you are making on the loan show be subtracted from any gain doesn't make total sense because you would have to be paying rent somewhere I assume. You can try to figure your net difference between rent and your mortgage payment by taking into account the tax saving.
Your other choice is to see whether what you have in savings 5 months down the road is enough to have a down payment without borrowing from the 401k. It may make sense to keep that money where it is, and take out a larger loan. If you would like to discuss this further, so that you can plan better, please feel free to give me a call at any time.
Robin Silverberg
Senior Loan Officer
Preferred Empire Mortgage
516-972-1687

I disagree with Ruth here. You only make a realized profit of about 25k if you sell the home when it goes up 10%. This never ever pans out. By the time you pay broker fees, transfer taxes, etc., you HAVE NOT tripled your money. Furthermore, the REAL cost of the home is the amount you put toward the mortgage payments, with the first few years of that being almost entirely devoted to paying interest. So in effect you are nowhere near tripling your money. In fact, if you were to follow that example, I feel confident in saying you would actually LOSE money as compared to keeping your 401k in an index fund, even in a down market. Yes many people have become rich investing in real estate, and others in starting a business, and others in saving it and taking small yields, etc., but by no means does that mean you should specifically do it. I would not, in any way, borrow from a 401k. The tax consequences are severe, and if you run into another "we never though this could happen in real estate" market, you'll likely lose your shirt as well. Just my two cents.

Why not contact your CPA and listen to his/her advice.

Anna

good afternoon........bill polack's coment is right on!.......also consider the fact that the monthly payment of your 401-k loan will be figured into your debt ratio when qualifying you for the new home......the 401-k loan payback is going to cost much more per-thousand than a 30 year fixed mortgage rate....also, the mortgage interest is tax deductable.....best regards....bob mcclure- success mortgage partners- plymouth, michigan....

Peter
Borrowing from the 401k is a good idea, especially if you can take advantage of the $8000 first time homebuyer tax credit. If you can go FHA and put down 3.5% even better.

As far as calculations for appreciation, consider this:
If you buy a home in a "soft" market for $400,000 and put 3.5% into it -- $14,000 -- and the home appreciates by 10 percent to $440,000 over the next 5 years (not an unreasonable assumption) than you have almost TRIPLED your money because your investment is $14,000 not $400,000.

Now, what is the likelihood that you could turn $14,000 into $40,000 in five years (or maybe less) through a CD or the return on your 401k?

Many people make the mistake of forgetting that they are not paying cash for the entire amount. Of course there is interest paid on the loan etc., but it is tax deductable and a substitute for rent. Further, if in the future you buy another home and you keep this property as an investment, you will be able to deduct all repairs and improvements AND take depreciation, at least as the tax laws are currently set up.

Most of the wealthiest people in America became wealthy through investing in real estate, not counting the handful of sports and entertainment celebrities, and even they invest in real estate.

You can verify the above with an accountant.

If you need help with your mortgage, I have been lending in the New York-New Jersey metro area for nearly 15 years and I am an experience real estate investor myself so I know first-hand the power of leveraging wisely.

Ruth Bonapace
Bank of America Home Loans
ruthbonapace@gmail.com
201 741 5269

Peter
Because IRA's/ 401K's withdrawals are taxable income and you
will be penalized for early withdrawal. By New York state law IRA is
protected from creditors. They can not get to it. My advice is to use is
asset to borrows. It will have more value in time to you and your family.
Let me known what you think.
If you have additional questions, please direct them
to me or need an agent feel free to call.
My Direct # 347-813-1290.
Here is my website http://fajardodelacruz.realtors.officelive.com
or my e-mail delacruz.fajardo3@gmail.com
Hope to hear from you soon.

I see where you are going with this idea. My best advise is to contact a financial advisor. Most will answer your question at no charge, or offer you other viable and creative ways of going about the same thing.

Uh. No. You are going to bank your retirement into a house hoping it will go up in value. You need to study the Rule of 72. That 10k or 100k investment will be doubling in value every 6 to 8 years till retirement. Your house will not. Remember that a house has no value until you sell it. Go by this: Optimal down payment - 20% down. For every $1000 you put down, you save about $6 (depending on rate). If you don't have 20%, put 5% down. If you don't have 5%, go FHA and put 3.5%. If you don't have 3.5%, put $100 down and get a hud repo. If you don't have $100, don't buy a house.