Reddit Posts
Mentions
This is a great point. Your 401k loan repayments will likely be more than your PMI, plus you're missing out on the compounding interest. I'd also avoid the loan. I was just in the exact same situation. The thought of having additional 401k debt on top of my mortgage was mentally exhausting. I found a loan officer who was able to get my PMI to $125/month. 3% down, 475k loan.
On the other hand, money spent on PMI is taxed and just gone.
You insinuated historical averages for the market, not your 401k. Even with that clarification yea my 401k is up 19.55% for the 1Y but you're missing the point. You'd very naive to assume 15-20% returns on your 401k year after year long term. You shouldn't be calculating the future based on 15 or 20% regardless. Either way my answer is the same with 10% returns. Paying shorter term PMI, especially with the plan to pay towards principal and get it off sooner isn't going to make up for the lost opportunity cost of the $18k worth of investments continuing to make money
I'd rather pay an extra $2k at closing to not have PMI than $2k/year in PMI for 8-10 years, plus have to fight the mortgage company to get rid of PMI at the end of the term.
Interesting. I can’t imagine PMI being wildly expensive over the course of living at the property. Maybe $150 a month, but even so that’s not even $2k a year, which would also imply we’d have to live there for 9 years to break the 401k loan number.
I had a mortgage through them several years ago. The rate was comparable to the other companies I shopped. Maybe closing costs were slightly higher, but I saved plenty through not having PMI.
Odds are if you're carrying the PMI for only but a short-term with knocking out principal over the first couple years, it's unlikely that you'll save more money doing that. Probably better off not taking the 401k loan and just paying the PMI. Without actual the house price point numbers, it's hard to say for sure but I'd find it hard to believe that it would be worthwhile to take the loan. This is coming from someone who has taken a 401k loan for a house too in the past, so I'm not inherently against it either, but it sounds like your PMI would be very short-lived and not enough to justify the missed opportunity of the 401k loan. Average market returns are not historically 15-20% though either. No need to use misinformation to make your argument though. Even with 7-10% which is average you'd still benefit from keeping that 401k invested
Find a credit union that does mortgages without PMI. If you're eligible, Navy Federal Credit Union does this with some of all of their loans.
How much is PMI going to be before you get to 20%? Is it that much that it makes sense to rob from your retirement?
Avoiding PMI by 401k loan is acceptable, especially if loan type has an upfront mortgage insurance premium charge. You can pay back 401k loan over a shorter time period which reduces the time out of the market.
>China's economy in the second quarter expanded 4.3% from a year earlier, the slowest pace in more than three years, missing the lower end of the full-year target of 4.5% to 5%. >The official manufacturing purchasing managers' index fell to 49.2 from 50.3 in June, National Bureau of Statistics data showed Friday, dropping below the 50-point threshold that separates expansion from contraction. Economists' median forecast had pegged PMI at 50. cnbc