Elsie
Member
- Jun 22, 2008
- 30
- 0
- 6
My husband and I want to move to Wisconsin within the next 2-3 years when he's done with his Masters Degree and after we sell our current home.
My brother (who is much better off financially that we are) is taking money out of his 401K to buy a vacation property in Florida. With the market the way it is, he was able to buy a resort condo for a great price. His rationale is that the stock market is so volatile right now that it makes more sense to take the money out of his 401K and spend it on something that he and his family can enjoy, and that he can use as his retirement home.
That got me thinking that maybe it would be a good idea to buy a place in Wisconsin now so we can take advantage of the slump in the real estate market. We could use it as a vacation home until we move there, or rent it out for a few years until we get jobs up there.
I found a 4 bedroom, 2 bath house in a great location (2 blocks from a park with lake access) that is only $150,000. We have almost 2/3 of that in our 401K, so if took every penny out for the down payment, we'd only have a $50,000 mortgage. At current rates, the monthly payments would be about $300 a month + taxes & insurance, which we could afford, but would put us in a position where we would not be able to do much more than work and pay the bills.
Whether it's this house or any other, is it a good financial decision to take everything out of a 401K right now to invest in real estate?
What are the tax ramifications of using retirement money before retirement?
My brother (who is much better off financially that we are) is taking money out of his 401K to buy a vacation property in Florida. With the market the way it is, he was able to buy a resort condo for a great price. His rationale is that the stock market is so volatile right now that it makes more sense to take the money out of his 401K and spend it on something that he and his family can enjoy, and that he can use as his retirement home.
That got me thinking that maybe it would be a good idea to buy a place in Wisconsin now so we can take advantage of the slump in the real estate market. We could use it as a vacation home until we move there, or rent it out for a few years until we get jobs up there.
I found a 4 bedroom, 2 bath house in a great location (2 blocks from a park with lake access) that is only $150,000. We have almost 2/3 of that in our 401K, so if took every penny out for the down payment, we'd only have a $50,000 mortgage. At current rates, the monthly payments would be about $300 a month + taxes & insurance, which we could afford, but would put us in a position where we would not be able to do much more than work and pay the bills.
Whether it's this house or any other, is it a good financial decision to take everything out of a 401K right now to invest in real estate?
What are the tax ramifications of using retirement money before retirement?