At a crossroad....need some advice

[VanWinkle]

Why is everyone so against using 401k, especially if the goal is to pay it back in less than 5 years? I want to make sure i understand the negative aspect.

Also, if I wanted to raise $100k I can borrow from 401k and pay myself 4.5% or sell some appreciated stock and pay CG of 15%. Sorry all if these are dumb questions.

Life happens and many people find that they are forced to pay back the 401K in a large chunk when there job changes unexpectantly. Also they have a large portion of money out of the market during this time of growth.

I almost did the same thing in 2011 when I bought my current house. Instead I took a 15 year loan with 20% down and paid it off in less than 5 years. I would not change a thing about how well that worked.

 

[street]

Mortgage for sure, especially now since rates won't get lower any time soon.

If the 15 year doesn't look appealing, get a 30, and pay it like it's 20.

To me this route is the best. I would not touch the 401K to pay debt in your situation.

 

[BeachOrCity]

Wow, thanks to everyone that commented, I truly appreciate it. Here are some of my thoughts to help flesh out the situation.

If we take borrow money from our 401ks, we will likely pay it back in 5 years or less. We would be paying ourselves 4.5% in interest while the loans were outstanding.

If paying cash for the home, I will still keep liquidity of roughly 1 year of expenses and that will grow as the DW and I get our paychecks. We are conscious of our spending, so the $2,500 or so that we are not paying for a mortgage will go right into our savings.

Based on some of the advice, I am considering taking a mortgage and try to have it paid off by the time DW stops working.... Will likely opt for 30 year mortgage for more flexibility, I can always pay more to speed up payments.

One of the things I was looking to accomplish is to harvest some stock appreciation. No one knows how long this market will keep making new highs, it will end at some point... I feel we should take some money off the table and put it to a good cause, our home which we do plan on staying for ever...or at least a very long time.

Thanks again for all of the comments and if there are additional comments thanks in advance.

Based on this you reminded me of something. My FIRE self said dont borrow from 401k for house, but this reminded me that back in 2004 when i was investing like crazy in real estate, i did exactly that. Took a 50k loan for real estate property so i could remain a bit more liquid. I figured i was paying myself the interest and while the market gained more than the 8 percent interest in the time i took to pay it back, i dont regret doing it. Do know this, the interest you pay back will be after tax dollars, and when you ultimateky withdraw thosee interest payments from your 401k you will pay tax on it again. So i would only use the 401k as a short term bridge if u go that route