hunybunnn t1_iuflgw9 wrote on October 30, 2022 at 11:12 PM

Reply to comment by Werewolfdad in Loan against my savings? by [deleted]

My money is invested in a pre-tax 401k, and also post-tax Roth IRA. There is enough money to draw from either bucket. I'm hesitant to sell because I've lost about 20-30% with the recent stock market fall.

Werewolfdad t1_iufloo3 wrote on October 30, 2022 at 11:14 PM

You can't borrow against an IRA and borrowing against 401k can be quite expensive in the long run since your money is out of the market.

I'd look into helocs

hunybunnn t1_iufmesq wrote on October 30, 2022 at 11:19 PM

A heloc is an option, but there would be points and interest at probably 8% or more. Also, I've worked so hard to pay off the house and psychologically I don't want to borrow against it. I could just pull the $30k out and gradually pay it back with my monthly contributions, but not sure if it is wiser to do that, or to go with what Transamerica is offering (borrowing my own money, can default, since it's my own money, and any interest comes back to me.)

Werewolfdad t1_iufmi74 wrote on October 30, 2022 at 11:20 PM

If you default you'll be subject to income taxes and a 10% penalty, which is way more than 8% interest.

If you have no mortgage, you should be able to find a heloc at prime minus, unless your credit is poor

hunybunnn t1_iufoaze wrote on October 30, 2022 at 11:33 PM

My credit is excellent. What about the points and charges in borrowing 30K? Is it wiser to take out the HELOC or just pull the $$ out and re-invest/replenish that amount over the next 15 months? The Transamerica guy make the "loan from myself" sound pretty decent because he said all the interest goes back to my account.

Werewolfdad t1_iufqyan wrote on October 30, 2022 at 11:53 PM

> What about the points and charges in borrowing 30K?

Most helocs don't have points or any sort of closing costs (at least any that ive seen).

>Is it wiser to take out the HELOC or just pull the $$ out and re-invest/replenish that amount over the next 15 months?

Heloc, especially if you have excellent credit. May just need a better lender.

> The Transamerica guy make the "loan from myself" sound pretty decent because he said all the interest goes back to my account.

Sure but he also left out the part where if the market turns around, you miss out on all those gains

hunybunnn t1_iufmurt wrote on October 30, 2022 at 11:22 PM

At my current contribution, I would pay back the $30k in about 15 months.