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Tag: retirement

Is It A Good Idea To Use Your 401(K) To Buy A House?

401(k) Rules

A 401(k) account is usually used to save up for retirement and that’s why investors get tax breaks for holding it. Due to its benefits, the government strictly regulates and limits access to these funds. If you are not of the required age to withdraw funds, you will be charged a 10% early withdrawal penalty on the amount taken. Also, there will be an additional regular income tax on the amount withdrawn. So if you decide to use the funds to purchase a home, you can either borrow from your 401(k) or withdraw from it.

401(k) Loans

Most people who take money out of their 401(k) account prefer to borrow from it because it does not have an early withdrawal fee or income tax. However, you have to pay it back with interest.  The repayment plan is administrated by the plan provider and the max loan term is up to five years. 

However, these repayments are not treated the same as ordinary contributions. There are no tax breaks, employer matches, and reduction of taxable income. Also, you can only take out 50,000 dollars or less.

401(k) Withdrawal

Not every plan offers 401(k) loans and if that is the case, then you have to withdraw from your account. This is called a hardship withdrawal, which results in a 10% penalty. It’s best to withdraw what you need so that you won’t have to pay it back.

Disadvantages of 401(k)s

Whatever you choose, taking out your 401(k) affects your retirement savings. You lose potential growth and won’t have as much money in the future. Diminishing your savings will mess up the amount of money that you saved up.


Trying to find a way to get money to buy a house can be difficult. Some people take out their 401(k) savings to purchase a home, but there are other options too. If you don’t want to make money from your retirement funds, it would be beneficial to take out a mortgage loan. At American Mortgage Resource, Inc., we offer many different mortgage loans for home buyers. Check out our website for more information.

How Reverse Mortgages Benefit Seniors

If you are 62 and older and own a home, you may be able to opt for a reverse mortgage. When you use a reverse mortgage, home equity is withdrawn as cash to pay for expenses like home improvements or debt consolidation.  You do not have to pay taxes on the proceeds or make monthly mortgage payments. Of course, there are requirements you have to meet in order to qualify. Read more about the benefits of a reverse mortgage.


After you retire, there are still monthly expenses to be paid. These expenses can begin to add up, leading you to find more options to supplement your income. Luckily, a reverse mortgage can help. Bankrate states, “A reverse mortgage can be a solution for consumers ages 62 and older who own their homes outright — or at least have a considerable amount of equity to draw from.” Some seniors use this loan to pay for living expenses, repaying debt, covering healthcare expenses, and more. It is also a way for seniors to enjoy retirement, giving them the freedom to purchase a vacation home or another property.


There aren’t too many drawbacks for a reverse mortgage, but you must keep some things in mind. According to Bankrate, “the borrower must maintain the house and pay property taxes and homeowners insurance.” Furthermore, you have to be living in your home as a primary residence, as well as keep your property in good condition. It is also good to note that closing costs can be expensive too.  


If you are interested in a reverse mortgage, contact the team at American Mortgage Resource Inc. We have a variety of loan options available and can help you make the right decision. For more information on our reverse mortgage services, call us at (617)-972-8588. We look forward to talking with you!