I wanted to share this that I received from one of our trusted partners, Mike Wickham at Caliber Home Loans, just in case it could be applicable to you. The CARES Act gives a couple of 401k options that borrowers may be able to use.
Borrowers can now take out of their 401k and have three years to put it back in; or, you can take it out early without the 10% penalty, and then you can spread the “income” over multiple years.
We see this as being helpful in a couple of ways:
- If someone with a 401k has a house to sell and they don’t want to sell before buying. Instead of coming up with the 3-5% (or in addition to), they can take it out of their 401k and then reimburse themselves once their home sells. This was true before, but most of the programs only allowed 60 days or so to do it. This gives the borrower more flexibility
- Or, if they’re planning to take out of their 401k for their down-payment, they can do it without the 10% penalty
If this is something that you would like to explore, give me a call at (317) 625-0655 and I can help sort through your options.
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