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how old are you?
I think you'd be hard pressed to not contribute to 401k, considering you make already minimum 100% of your 5% (employer match) not including any other increase, either way, 401k will most likely out perform your home...
This all comes down to the opportunity cost argument. Maybe you can find a happy medium? How much do you contribute now? I would do 5% (so you get the full match) then save the rest
That employer match is a fantastic benefit -- it's essentially a 100% return on your savings even if the value of your 401(k) doesn't move at all! (Looked at another way, your 401(k) could lose up to half the value of what you paid into it in the past year and you're still ahead of the game if your employer had been matching your contributions!)
Normally I'd recommend buying, even with a high LTV ratio, because there are few safe investments in the world that pay out returns that are higher than the return you get in paying off your mortgage early. But a matched 401(k) makes it tough to decide.
How much do you put into your 401(k) every month? How much is your rent per month? What's the value of the homes you're looking at? Your question really can't be answered without filling in numbers.
Employee match is hard to beat deal. That's 100% return on investment guranteed. 401k is something you will need in the future. I'd definitely not skimp on it.
What you're basically saying is that, you haven't saved enough for 3.5%, don't have money now, and you'd like to tap on your retirement fund to buy something. Man, that is poor decision, and there must be a reason why you end up with this situation. I am not gonna tell you should have done this and that stuff. The thing I can tell you is, you'd be better figure out why this happened, adjust yourself according to that and start building your own nest egg, otherwise you're going to be left out paying someone else's mortgage.
I'd say the depressed market such as yours is not going to bounce up in a day, so you got time to sort things out and build your own while you're renting.
Regarding to your question, I think it all depends on the numbers. Can't get you any answer w/o those numbers.
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With the the prices going up and up years ago, I was one of those that was priced out of the market and have been renting. Now I am thinking I "have" to jump in to buying, since paying for rent will probably be the same monthly payment more or less than renting, and some places locally I've noticed have reached prices I last saw in 2000-2002 (comparing a property I bought and sold around that time).
So the issue now is saving for the down payment, 3.5% - 5% for fha. I'm thinking if to hold off my 401K contributions for a year to save for the down payment or not.
Let's assume a few conditions:
1.Borrower can't save for the down pmt and put $ into 401K at the same time. It's one or the other.
2.Employer matches 100% up to 5% of your contribution. THIS is the hard part, give up that matching for 12 months or not.
Obviously, not looking at the home purchase as an investment, but paying someone else's mortgage with my rent payments is not a good feeling.
Thoughts?
#housing