Financial Advice

L1: Financial AdviceKeith-Have had many clients in your situation over the years. Will give some general suggestions as you have not supplied enough info for me to be real specific.
1-IF the $3,500 you say you can pay is money coming from your regular income from work, you would want to use that first and consider getting monthly payments or a large down paymentfrom a401k or an IRA ONLY IF you needed more than $3,500/mon. for your house payment.
2-IF the $250,000 in investment equity you mention IS NOT in a 401k or IRA, using that money for a down payment or using itto produce incometo pay any part of the payment over $3,500 is definitely better than using 401k or IRA funds for that purpose.
3-IF the $250,000 IS in a 401k or an IRA and you are contributing $2,200/mon. to your 401k, you should consider stopping all or part of that monthly contribution and using the money instead to help make you monthly payment. This is because it usually doesn’t make sense to continue to contribute moneya 401k or IRA while drawing money out of another 401k or IRA, especially if you are under 59.5 and would have to pay them 10% penalty on funds form the 401k or IRA. An exception to this can be if your company is matchingall or part of your 401k contribution. The higher the percent they match, the less sense it makes to stop contributing to increase your monthly income. Most 401k’s match only up to a certain percent of the amount you contribute and it would make sense to stop the percent your contribute over the percent they match.
4-Keep in mind that when you turn 59.5, you should be eligible to rollover your 401k to an IRA even if you continue to work for the same company so at 59.5 you could start taking monthly income from the R/O IRA without the 10% penalty. What I want you to see is that your options for funding the house will change over time so you can have a plan now that you plan on adjusting later at 59.5.
I hope this is of some help in terms of general guidelines and not too confusing.As you can tell, this type decision can get complex and I agree with others that you need a pro to give you the guidance you need to be sure you know all the options, now and as time passes,and have all the info you need to make a good decision. Best of luck2005-11-06 14:40, By: john, IP: [24.182.94.66]