Don't get a 401k loan if your job isn't secure

by Mary

I actually did borrow against a 401k when my husband and I purchased our current home. The only part that really hurt us was that it was a loan with biweekly payments. We realized the commute to my job was too long and I ended up getting a local position instead. When I resigned, they took the loan out of my 401k proceeds... which meant that I had to pay taxes on the funds. However, my tax guy made an error which was only found during an IRS audit so we owed a fine and late fees. I would never recommend this loan to anyone. If there is no down payment available, just buy a home with enough equity to get the ratio you want instead of making a loan against your savings.