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I'm in my 50's. We lost our previous home to a short sale and along with out all our Equity; 200k thanks to me losing my job on Wall St. when the ^$&# hit the fan.
I am now renting a home in another state and it is killing me renting for the 1st time in 30 years.
I only have $70k in my 401k, should I use some of that for a downpayment on a reasonably priced home and start rebuilding equity. I would like to pay off the home in 10 years.
Does this make any sense? I don't think I can accomplish accumulating cash for a downpayment and contributing large chunks of money into my 401k.
If you can repay the house in ten years, then it may be worthwhile - when are you thinking of retiring? You mentioned being in your 50's. Are you 59.5? If so, you can withdraw with no penalty. Under that age, you would have to pay IRS penalties, unless you were looking at borrowing from your 401k.
I had a home built 6 years ago for 425k. The home rose to 615k in 18 months and the bottom dropped. A few months ago it was appraised at 255k.....No such thing as building equity in the Florida market.
HI Synergy1, I hear what your saying. I purchased a home for $750k and was told it would appreciate over $1mm, instead it bottomed at 570k. I won't make that mistake again.
I'm looking at short sales or foreclosures that I know will be below market and i'm staying away from the water.. I'm in my mid-50's
Hi kbrkr....Your plan seems to be good but short sales are not favorable to me unless the wait time can be predetermined for a bank's reply. I started in DC with my younger brother purchasing duplexes. That was in 2002 and we made 120k from a pair of duplexes and our costs to repair the newer places was just under $250.00. We were lucky. The key to us was buying and selling within a month. That way our costs will be limited. We also sold "contracts" for homes we won and given the tough times we are now in that my be a tough assignment.
I am now in SE Florida and just look for bargains. I retired at 55 from 36 years on a good job in the government. I had to get out of the mess and that was the best thing I ever did to date..
Great Point mathjak107! I sort of feel this move is protection for the future too! My wife and I will be assured of a home to live in when we retire. Right now, that is not so certain as we rent. I'm not talking about investment property, this is my primary residence. I do view it as an asset that can be converted to cash if we find ourselves short. The gamble is if property in Central Florida will appreciate. As Synergy1 put so well, it all depends on how low below fair market value I can get a home. I don't expect the 10% increase in value that was prevalent 10 years ago. But then again, will I get 10% on my 401K?
I don't think I can accomplish accumulating cash for a downpayment and contributing large chunks of money into my 401k.
This needs some clarification. Are you saying that you can't accumulate cash for a down payment because you are making large 401k contributions? If that's the case why not just stop or scale back your 401k contributions temporarily while you save up for a down payment? This would be more advisable than dipping into your current retirement savings IMHO.
Great Point mathjak107! I sort of feel this move is protection for the future too! My wife and I will be assured of a home to live in when we retire. Right now, that is not so certain as we rent. I'm not talking about investment property, this is my primary residence. I do view it as an asset that can be converted to cash if we find ourselves short. The gamble is if property in Central Florida will appreciate. As Synergy1 put so well, it all depends on how low below fair market value I can get a home. I don't expect the 10% increase in value that was prevalent 10 years ago. But then again, will I get 10% on my 401K?
remember though you cant eat the living room. you will need lots of dough through retirement too.
you need a house to keep housing costs low, and money to eat and pay bills.
either one without the other and you can lose the war.
If you, a 50-something former Wall St. employee, think that it's a wise financial move to pull money from your 401K to make a house downpayment, it's no wonder Wall St tanked. Dude, if you can't save up the money, you can't afford to buy the house. Did you learn nothing from the mortgage crisis? Please keep your 401K healthy, so the collective WE don't have to support your butt when you get old.
Either find another way to raise cash (increase your income, sell some "stuff," etc.) or defer buying a house until you can actually afford it.
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