Liquidating 401k for home purchase

When I first ask a couple how they want to divide assets, dividing all accounts in half is the standard answer.When considering a 401k, this may not be the best solution for many reasons.That way, you'll really appreciate what say, 0,000 can get you that 0,000 can't.Second, you want to do your own math because the bank may say you can afford more house than you would actually be comfortable paying for.While the bank will ask for very detailed financial information when you apply for a mortgage, it will not know the amounts of quite a few costs that eat away at your disposable income, like what your monthly grocery expenses are, how much you spend on gas, what your health insurance premium is, if you're diabetic and have high ongoing medical costs, what your water bill is and how much you spend on entertainment.What the bank will know about are your monthly debt payments (like credit cards and student loans), the four major components of your home payment (property, interest, taxes and insurance) and any amounts you are legally obligated to pay (like child support or alimony).With rare exceptions, all traditional 401(k) withdrawals are taxable as ordinary income, although Roth 401k assets are treated differently.In an ideal situation, you would not withdraw funds from your 401(k) until after you retire.

My first IRA over 30 years ago was with Charles Schwab .

By Amy Fontinelle So you've picked out some locations you're interested in and thought about the style of home that suits you best.

Now it's time for some planning of the less fun variety.

Before you start looking at houses and, somewhat counterintuitively, before you start shopping for a loan, you need to figure out how much home you can afford. The reasons for doing your own affordability calculations are twofold.

First, you don't want to look at houses you can't afford.

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