SAN DIEGO, Sept. 20, 2013 /PRNewswire-iReach/ -- LoanLove.com is a borrower advice website that provides detailed insights into the mortgage industry in a fun and entertaining way. The team at LoanLove.com is devoted to help empower both first time and experienced homeowners with valuable resources, first-class knowledge and connections to top-rated industry professionals and has the mission of helping consumers and borrowers to obtain the latest information on mortgage lending trends, the real estate market and the U.S. financial landscape in order to help them obtain a home loan that they will love. Loan Love continues to support readers with their expertise by giving them 401k down payment assistance in their newly released article. This article, entitled "Should You Use A 401k Withdrawal For Home Purchase? (Pros/Cons)" provides the know-how and tips as to whether or not taking money out from a 401k fund is the right choice for customers.
To future retirees, a 401k can be a useful fund as it continues to grow well into the senior years. Often times it is best to leave it untouched until a retirement plan is active. But oftentimes home buyers may be faced with huge payment liabilities and the lure of a 401k fund withdrawal can be tempting. As the Loan Love article reads:
"Taking money from your 401K seems like a good choice – it's your money, so why shouldn't you use it? Most retirement blogs or guides you read warn strongly against 401K withdrawals, thanks to penalties and fees for tasking your money out early (this is a retirement account, after all). But is it always a bad choice? And what are your alternatives?"
The article continues to expand on these alternatives by naming three important steps every loan borrower should consider. Namely before withdrawing money from a 401k, a loan borrower should look into getting a second mortgage loan from their lender. If not, seeking another lender for a mortgage loan can help ease the costs of down payment like a new home.
Another option is for the borrower to suggest to their lenders if they can support a larger mortgage loan, enough to cover approximately 90 to 95% of a home's value which the loan borrower in turn will pay private mortgage insurance, or PMI for short. However, the article warns readers that PMI can increase monthly costs, so before home buying, using a mortgage calculator might be necessary before securing the loan.
One final alternative loan borrowers can take advantage of is to take a loan directly from their 401k. Many loan borrowers may be unaware that they can use their 401k as a direct source of loans, provided their employer allows it. In this case, the account serves as a lender. Interest is paid, but the interest paid back into the account to compensate for the earnings you'll lose by taking out some of the principal. Loan Love again warns loan borrowers by saying: "Here, the major risk is that if you lose your job before paying back your loan, you have to pay back the loan in full within a pretty short period of time – usually a couple of months – or else it will be considered a withdrawal and all those penalties will apply."
Exploring these alternatives can help loan borrowers find the best calculate which option is best for their salary and budget. To find out more on 401k down payment assistance, please visit LoanLove.com.
Media Contact: Kevin Blue, LoanLove.com, 949-292-8401, firstname.lastname@example.org
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