Originally Posted by
Bucking Bar
Yep points are points.
I think some people overlook the availability of loans from their 401K. If pilots are holding much in bonds (looking forward) or cash they would probably get a better safer return by "investing" in their own "TenYearsGone Bond Fund." The tax benefits of the mortgage deduction are offset by keeping all of your interest for yourself.
It seems we are taught 401K loans are always bad. But, leverage with one's own money seems a safer and more productive alternative than leverage with someone else's money. It is a true no cost loan ... your interest goes right back to you. Also in our industry the relief provided during furlough might be considered an additional benefit of the non traditional approach.
As a former pro in the biz, do you agree?
Far from pro,
But depending on your discipline,asset exposure and diversification; I am a proponent of borrowing money from one self (401K) to leverage into a Real Estate purchase. From what I recall you can borrow up to 50K on a 10 year payback with around 4% interest. If you are in the school of thought of paying your mortgage off, then use this tool to buy with 20+% down or else you will be paying PMI or government fees.
Also one has to take into account the upcoming rise in inflation. Rise in inflation, can and will effect your your interest rates, house values, stock values and most importantly the "TenYearGoneBondFund"
(lower principle value).
TEN
PS> When dealing with home mortgages. Do your own homework. Find out what the true PAR is with your rate (kind of a slippery number). Inspect APR and compare with rate (should be extremely close or you are receiving a lot of costs) and ask a lot of questions. When a loan officer lets you know that your loan is 0 points and no cost to you, he/she is basically wrapping your costs to the loan or not giving you the best rate equivalent to PAR or minus. Negotiate your admin fees. Ask for a hud1 form before settlement date<--prompt this! Compare hud1 and gfe, they should be extremely close.