Home Equity Loan vs. 401(K) Loan –Which should you choose?

Written by Charles Essmeier


Continued from page 1
  • If you have a diversified 401(K) account, you will probably be earning interest on your retirement money. In fact,repparttar interest rate you are earning on your retirement fund may exceedrepparttar 135526 interest rate you would pay for a home equity loan. In that case, you take out a home equity loan, leaverepparttar 135527 retirement money where it is, and you should earn a net gain betweenrepparttar 135528 two.
  • If your retirement fund is earning good interest, and inrepparttar 135529 late 1990's many were earning upwards of 20% per year, then borrowing on your principal could hurt you tremendously inrepparttar 135530 long run. Due torepparttar 135531 nature of compounding,repparttar 135532 amount you lose by borrowing from your retirement account could be far more than simplyrepparttar 135533 sum ofrepparttar 135534 loan amount plus interest.
  • The interest on a home equity loan is tax deductible, up to $100,000. The interest on a 401(K) loan is not.


  • There are certainly some circumstances where you might benefit from borrowing from retirement funds instead of taking out a second mortgage, but those situations are fairly rare. A substantially higher interest rate onrepparttar 135535 home equity loan thanrepparttar 135536 401(K) loan would be one such example. If in doubt, you should consult with a financial planner.

    ©Copyright 2005 by Retro Marketing. Charles Essmeier is the owner of Retro Marketing. Established in 1978, Retro Marketing is a firm devoted to informational Websites, including http://www.HomeEquityHelp.net/ and http://www.End-Your-Debt.com/


    Why use a loan calculator?

    Written by Jakob Jelling


    Continued from page 1

    Or you can use your monthly earnings to determine via a loan calculatorrepparttar house you can afford without overheating your household budget.

    A great advantage of loan calculators is to compare loan offers. A loan calculator can makerepparttar 135525 job of comparing two or more loans to findrepparttar 135526 best deals.

    Loan calculators can also be helpful when consolidating or refinancing your debt. You can compare your current loan withrepparttar 135527 new loan offers and decide if you will be saving enough to makerepparttar 135528 transition to a new loan.

    A loan calculator can also help you see how much you will have to pay in interest and principal payments each month. Thus you can establish a monthly repayment amount that is best for you, where you are paying offrepparttar 135529 principal as well asrepparttar 135530 interest. A loan calculator can help you setting up your household budget and savings plan forrepparttar 135531 coming years.

    Jakob Jelling is the founder of http://www.cashbazar.com. Visit his website for the latest on personal finance, debt elimination, budgeting, credit cards and real estate.


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