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Should I use 401K to Payoff 2nd Mortgage

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Money Talk > Retirement Planning

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wmgold2002
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Should I use 401K to Payoff 2nd Mortgage  Reply with quote  

I am a current retiree with a 1st and 2nd mortgage. I am underwater on my combined mortgages vs. the current home listings in my area. Am I better off paying off my 2nd mortgage with a combination of Roth and Traditional 401K funds? My 2nd mortgage rate is a little over 9% and I can not refinance it at a lower rate.Then possibly refinance the 1st mortgage at a lower rate (currently at 4.50%)?
Post Fri Jul 11, 2014 1:13 pm
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oldguy
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It depends on what you are invested in. If the 401k/Roth money is earning 10%/yr and the loan is costing 9%/yr, it might be best to keep the loan. Conversely, if the money is earning 1% (CD rates) and you are paying 9% for it, it would be good to prepay the loan.

I would use the Roth money first - the 401k money comes with a big tax bill, maybe 25%, Fed & State. So, if possible, leave the 401k alone - sell a small amount each yr beginning at age 70 1/2 to keep the tax rate low.
Post Fri Jul 11, 2014 1:45 pm
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JonCartoon
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i can wright big answer, but...
no you can't
Post Fri Jul 11, 2014 6:16 pm
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Wino
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One big question is "What is your age?" If you're younger than 59.5, then the answer is a resounding, "No." You would have to pay your tax rate on the 401K plus 10%. As well, if you withdraw earnings from the Roth, you would have to pay the same along with the penalty.

"Current retiree" doesn't mean "over 59.5."
Post Fri Jul 11, 2014 9:58 pm
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LavoniaDamelio
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Americans need a bit encouragement to save more money for their retirement. This is a one way that law makers decide to help them and at the same time lowering their taxes. There it goes the 401k retirement loan, however, some of them having trouble paying for it. If you need some financial help, get a payday loan.
Post Fri Jul 11, 2014 11:17 pm
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blixet
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Yeah, a payday loan. That's the ticket. Rolling Eyes

Information is more valuable sold than used – Fischer Black
Post Fri Jul 11, 2014 11:22 pm
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Wino
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Payday loans are the stupidest thing one can do. I wish Coaster came back to deal with these spammers. Soon, I'll stop coming here without any grown-ups to rein in these shysters.
Post Sat Jul 12, 2014 12:53 am
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blixet
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There is a lot of ridiculousness on these boards for sure. Hang in there Wino, don't let the inmates take over the asylum!

Information is more valuable sold than used – Fischer Black
Post Sat Jul 12, 2014 1:54 am
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