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DK

Withdraw From 403(B) For Down Payment For House

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Hi,

 

I will be starting to look for a house soon and was wondering if I should withdraw my contribution from my 403b to increase my down payment. With what I have now outside the 403b, I know what I qualify for but I would like to purchased a more expensive house. The only way to do this is to raise my income or put down a larger down payment. The only other place to get money for a larger down payment is from my 403b. I'm pretty sure that the Loan Officer will want to see at least 6 months of reserves.

 

Should I take money out of my 403 for the down payment? I know that if I do, I will have to pay ordinary tax on it but not the 10% penalty. Am I right on this? Since the LO wants 6 months of reserve, can the money inside the 403 count as reserve?

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DK

 

Why would you pull money out of a 403b to buy a bigger house? If you need to do that then just maybe you can't afford to buy the house .If you withdraw funds already invested why would you not pay a penalty? I wouldn't pull money out of a 403b . Its a bad decision.If you need more money to buy the house you can stop future contributions if that helps give you more money for the mortgage. That's not smart either in my humble opinion.

 

Keep in mind though with a bigger house comes a bigger mortgage payment, utility bills, taxes and so much more. Make sure you are not biting off more than you can chew.

 

Investing in retirement should be one of your highest priority goals because we don't know what the future holds.

 

 

Tony

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DK

 

Why would you pull money out of a 403b to buy a bigger house? If you need to do that then just maybe you can't afford to buy the house .If you withdraw funds already invested why would you not pay a penalty? I wouldn't pull money out of a 403b . Its a bad decision.If you need more money to buy the house you can stop future contributions if that helps give you more money for the mortgage. That's not smart either in my humble opinion.

 

Keep in mind though with a bigger house comes a bigger mortgage payment, utility bills, taxes and so much more. Make sure you are not biting off more than you can chew.

 

Investing in retirement should be one of your highest priority goals because we don't know what the future holds.

 

 

Tony

 

 

It's not so much a bigger house but a more expensive house because of the location. In the city that I live in now, I could buy a house based on what I have currently (money for down payment, income, debt, etc). Now, the city that I want to move to, the average cost of a house is higher. It'll also be closer to where I work and it's a better city. Now, if I continue to save like I am now, then I could probably afford to afford a house at the average price in about 10 months, assuming the average price of a house in that city doesn't go up. I just want to be ready just in case I see the perfect house.

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Hi,

 

I will be starting to look for a house soon and was wondering if I should withdraw my contribution from my 403b to increase my down payment. With what I have now outside the 403b, I know what I qualify for but I would like to purchased a more expensive house. The only way to do this is to raise my income or put down a larger down payment. The only other place to get money for a larger down payment is from my 403b. I'm pretty sure that the Loan Officer will want to see at least 6 months of reserves.

 

Should I take

 

DK, in money out of my 403 for the down payment? I know that if I do, I will have to pay ordinary tax on it but not the 10% penalty. Am I right on this? Since the LO wants 6 months of reserve, can the money inside the 403 count as reserve?

 

 

 

DK,

 

In order to access your 403b account you have to a qualifying event- separation from service, attained age of 59 and half, disability or death. Do you have any of these qualifying events? If so, you can access your account. If not, you can not take money from your 403b account. As to your question about how your lenders look at retirement funds, that is a question best directed to him.

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Hi,

 

I will be starting to look for a house soon and was wondering if I should withdraw my contribution from my 403b to increase my down payment. With what I have now outside the 403b, I know what I qualify for but I would like to purchased a more expensive house. The only way to do this is to raise my income or put down a larger down payment. The only other place to get money for a larger down payment is from my 403b. I'm pretty sure that the Loan Officer will want to see at least 6 months of reserves.

 

Should I take

 

DK, in money out of my 403 for the down payment? I know that if I do, I will have to pay ordinary tax on it but not the 10% penalty. Am I right on this? Since the LO wants 6 months of reserve, can the money inside the 403 count as reserve?

 

 

 

DK,

 

In order to access your 403b account you have to a qualifying event- separation from service, attained age of 59 and half, disability or death. Do you have any of these qualifying events? If so, you can access your account. If not, you can not take money from your 403b account. As to your question about how your lenders look at retirement funds, that is a question best directed to him.

 

 

I agree with Tony about this. This site is about trying to help people with their 403b. A 403b is not for short term planning such as saving for a down payment of a house or car or whatever. You will regret this decision. Trust me, I am just an old geezer. If you want to buy a bigger house at a better location, save for it in after tax accounts, CDs, etc. Reduce your 403b contributions to save. But never touch that 403b for a house or car.

BTW, making a haste decision thinking that housing prices are going up, is not a good idea.

 

Happy holidays,

Steve

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STEVE,

 

Please stop calling yourself an old geezer. You are a high respected member of this board who always gives good advice. You are not old my friend, you are wise.

 

 

Tony

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Okay. I won't touch my retirement account. Thanks for the advices.

 

 

Probably the right choice. I'm also curious if your administrator would even let you get at the money. The hardship rules are pretty strict. If your house was in foreclosure then I could see that being allowed. But wanting reserves for a house purchase would be very iffy.

 

BTW, I would just keep saving and try to get to the city you want to live in. It seems like double dip housing drop is more likely than home prices going up. And with gas/commodity prices on the rise, shortening your commute will be a good thing financially as well as for your mental health.

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