Each Wednesday 401kBasics posts a new article in a weekly series called “Keep the Course”. This series is designed to give the average consumer information on how to keep their 401k plan on track! Your feedback or suggestions on future articles is welcome.
Over the next few weeks, 401kBasics will feature some of the most commonly asked questions.
”If I borrow money from my 401(k) plan to purchase a home, how long do I have to pay it back?”
Home loans, or residential loans can have a term of up to 30 years–similar to a mortgage. However, your retirement plan, may have an internal, shorter limit than the IRS regulations.
There are a few things to keep in mind with these types of loans, the first of which is that it has to be taken for the purchase of a primary residence–not a second home, or vacation home. Another thing to keep in mind is that you typically have to provide documentation when you request the loan–such as a copy of the purchase and sales agreement or a good faith estimate.
For more information contact your employer or your service provider to determine if the plan allows for a 30 year residential loan.
This site is for entertainment purposes only. 401kBasics and it’s authors are not financial advisors and no information found on this site should be construed as financial advice.