Results 1 to 11 of 11

Thread: TSP Loan for Home mortgage

  1. #1

    Default TSP Loan for Home mortgage

    Hello all, I'm toying with the idea of taking out a TSP loan to put down for another mortgage, I could go with VA loan and put nothing down at all, but I was wondering if this is the better way to go? if anyone has done this please let me know.

    I am planning to rent out the property once I have orders.


  2.  
  3. #2

    Default Re: TSP Loan for Home mortgage

    gonna bump this for some monday help

  4.  
  5. #3

    Default Re: TSP Loan for Home mortgage

    Never Ever take a loan from a retirement account. take a loan from a bank. let them carry the risk, not you.

    10 reasons- Ric Edleman
    http://www.cnbc.com/2014/09/08/top-1...401k-plan.html

    8 reasons
    8 Reasons To Never Borrow From Your 401(k) | Investopedia
    "Our Constitution was made only for a Moral and Religious people. It is wholly inadequate to the goverment of any other." John Adams 10/11/1798

  6.  
  7. #4

    Join Date
    Apr 2008
    Location
    Cleveland, Ohio
    Posts
    10,533

    Default Re: TSP Loan for Home mortgage

    If you take the money out to use as a down payment for a mortgage loan it costs you more than it is worth. First you pay taxes on the withdrawal, then you loose money if the stocks go up and you have to it back.
    May the force be with us.

  8.  
  9. #5

    Join Date
    Sep 2006
    Location
    Rocky Mountain High
    Posts
    6,794

    Default Re: TSP Loan for Home mortgage

    Quote Originally Posted by nasa1974 View Post
    First you pay taxes on the withdrawal,
    I'm not sure if that is correct.
    Weatherweenie's Account Talk
    Expected retirement date: November 2023

  10.  
  11. #6

    Join Date
    Feb 2012
    Location
    Arkansas
    Posts
    3,276

    Default Re: TSP Loan for Home mortgage

    Quote Originally Posted by nasa1974 View Post
    If you take the money out to use as a down payment for a mortgage loan it costs you more than it is worth. First you pay taxes on the withdrawal, then you loose money if the stocks go up and you have to it back.
    I borrowed against my TSP many years ago while I had 15 or so years to retirement. It was a down year for stocks, I structured it to be paid back in 3 years, and the loan interest rate was something like 2.125% at the time. I borrowed enough to make a 20% down payment on my current house to avoid PMI. As for tax liability, you don't pay taxes as long as you pay it back in full.
    No, it's not the best avenue for funding part of a mortgage, but if you structure it to pay it back in a short amount of time it is a viable option.

  12.  
  13. #7

    Join Date
    Dec 2007
    Location
    inland Northwest
    Posts
    4,105

    Default Re: TSP Loan for Home mortgage

    I've avoided borrowing from tsp all these years for all the reasons given at the links valkyrie provided. Am considering breaking the rules this year if it makes sense to break them, not sure yet. May have found the perfect retirement property last night. requires further research before I make any moves. cost of running power, water from 2-3 lots over, how many gpm the community well provides, how many acres allowed to water, HOA restrictions on use of land, IS there an HOA? there's a lot 2 over that has been used for small business, could still be used that way or as residential-has all utilities already due to past use. not interested in that lot, but if that one could be used mixed, maybe this one could be as well. decent road access, still rural. also need to investigate: soils, depth to bedrock, perk test for septic, etc.-the former commercial property has some very solid rock outcrops visible on the upper slopes. I like what I see. price is steep still but just came down by 30%, now it matches neighboring lot prices.

    If I took loan from tsp, wouldn't be til fall, after had a chance to visit lot in person, ask more questions in person, if lot still available by then. would plan to pay off in 3 years-by intended retirement date. would mean serious belt tightening, but could pay off out remaining loan out of current Roth if job ends sooner than expected. By end of September this year-no early withdrawal penalties if not paid off prior to retirement. own property free and clear by retirement. that's my current thoughts. plan I wouldn't be considering at all if contingency factors weren't in place before pulling any tsp to finance the downpayment @ ~60%, 15yr fixed for the remainder. build once I'm ready to sell where I am currently.

    Other option would be to only put down 20-30%, pulled from existing Roth.
    "life can only be understood backwards, but it must be lived forwards" - soren kierkegaard

  14.  
  15. #8

    Join Date
    Jun 2006
    Location
    Wilmington,NC
    Posts
    821

    Default Re: TSP Loan for Home mortgage

    Long story short I borrowed from my tsp to help finance a house I flipped. As far as I'm concerned it worked out great for me. It was around 2006 and when I was paying back my loan the market was down so I was buying shares and paying myself back at a time when share prices were cheap. So I was also kept contributing and paying back my loan at lower rates cha Ching when the market wasn't making me money but I was buying share cheap at least. I know I said that several times but I wanted to get my point across. I did know that I needed to pay off before retiring in 2014 to avoid that big taxe on capital gains, and I did. Soooooooo if the shoe fits wear it. Good luck to you

  16.  
  17. #9

    Default Re: TSP Loan for Home mortgage

    Quote Originally Posted by nasa1974 View Post
    If you take the money out to use as a down payment for a mortgage loan it costs you more than it is worth. First you pay taxes on the withdrawal, then you loose money if the stocks go up and you have to it back.

    problem is it could also go down. I get your points though, I dont know about taxes on the loan.


  18.  
  19. #10

    Join Date
    Dec 2007
    Location
    inland Northwest
    Posts
    4,105

    Default Re: TSP Loan for Home mortgage

    taxes on the loan don't hit direct, not unless you only take them out once and haven't paid them back before you retire.

    Otherwise they hit indirectly the first time, because you are paying the loan back with takehome pay, after taxes taken out. and because you are putting after-tax monies back in, you end up paying the taxes again second time when those funds come out again as retirement withdrawals. which is why I may still end up waiting to buy retirement prop right after I retire, not before. or may use outside funds to make big downpayment if I buy before retiring, rather than pull from tsp for pre-retirement downpayment.
    "life can only be understood backwards, but it must be lived forwards" - soren kierkegaard

  20.  
  21. #11

    Join Date
    Aug 2011
    Location
    Valatie, NY
    Posts
    260

    Default Re: TSP Loan for Home mortgage

    Quote Originally Posted by alevin View Post
    taxes on the loan don't hit direct, not unless you only take them out once and haven't paid them back before you retire.

    Otherwise they hit indirectly the first time, because you are paying the loan back with takehome pay, after taxes taken out. and because you are putting after-tax monies back in, you end up paying the taxes again second time when those funds come out again as retirement withdrawals. which is why I may still end up waiting to buy retirement prop right after I retire, not before. or may use outside funds to make big downpayment if I buy before retiring, rather than pull from tsp for pre-retirement downpayment.

    Unless you are in the ROTH option. Then it is not taxed the second time coming out.

  22.  

Tags for this Thread

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •  
SPY (C Fund) (delayed)
TSP Loan for Home mortgage
(Stockcharts.com Real-time)
DWCPF (S Fund) (delayed)
TSP Loan for Home mortgage
(Stockcharts.com Real-time)
EFA (I Fund) (delayed)
TSP Loan for Home mortgage
(Stockcharts.com Real-time)
BND (F Fund) (delayed)
TSP Loan for Home mortgage
(Stockcharts.com Real-time)

Yahoo Finance Realtime TSP Fund Tracking Index Quotes