Liquidate 401k for home purchase

[doingitallwrong]

The penalty exception applies to the first 10k only, and that is a lifetime limit. Just pointing it out.

Absolutely correct, thanks, I had that in there at one point and accidentally lost it in editing!!

Here is what I think we have decided to do. both of our 401ks allow us to roll over 10k into an IRA which we may use penalty free. We will then take an additional 25k from our emergency fund Which currently has about 60k.

Better option would be to use $45k out of your efund for the DP and drop your contributions until you build it back up to where you're comfortable.

I agree. (If I'd known you had $60K in the bank I wouldn't have even bothered with my other long post. ) $15K is not a shabby EF by any means and if it really came down to it, in a major emergency *then* you could withdraw from your 401(k). (Again, not recommended, but if it's a choice between homelessness now and retirement in 30 years....)

Even ignoring the "retirement money is sacred" thing, it makes more sense to take money from an account earning at most what, 1% interest, vs. an account earning on average 7.5%.

Using the assumptions from your earlier examples, if you leave your 401(k) alone, drop your contributions to $10,000 per year for three years, and then go back to contributing $30,000 per year for 27 additional years, in 30 years time you'll have $2.25 million. (That doesn't include your employer's matching contributions.)

[JoeP]

If you cannot put down at least 20% in cash as a downpayment along with a 15 year fixed rate mortgage, then no amount of rationalization can change the fact that you simply cannot afford the house right now.

We're trying to help you. Why not rent an apartment closer to work so that your commutes are shorter? How about pulling back temporarily on your 401k contributions and stockpile the cash? Can you find other ways to free up money by lowering your expenses? Lots of people here save by changing cell phone plans, cutting cable and satellite, using term life policies, getting new quotes on auto and renters insurance, etc.

[corn18]

...Excuse me now...im going to time the market and invest in penny stocks after which ill head to the nearest grocery store and send a $5,000 money order to my long lost relative so he can cash out $10 million from a prince he knows in another country and give me half.

That made me giggle. Don';t forget the bitcoins. Gotta get the bitcoins.

[bjl584]

OP - your impatience is causing you to contemplate doing something that is unwise.

Slow down, take a breather. There are plenty of houses out there. You don't need to buy right now. Take your time. Save up. Buy when you are financially ready to do so.

[rennigade]

That made me giggle. Don';t forget the bitcoins. Gotta get the bitcoins.

Knew I was forgetting something!

[autoxer]

Also the area we are looking to buy is a new development in a booming a booming area of town where home values are sure to skyrocket.

What makes you think that home values are going to skyrocket in that location?

If whatever makes you think values will skyrocket was public knowledge, then there would be a lot of people speculating and driving the prices up already. If whatever makes you think values will skyrocket is only known by you, then buy as many houses as you can. How well do you trust your economic theory?