Last week we looked at the requirements for a TSP loan.  This week we'll examine some additional things to consider before taking out a loan.

First, you need to decide what type of TSP loan is best suited for you: a general purpose loan or residential loan.  General purpose loans are easier to obtain.  They don't require documentation like residential loans do.  You have to pay general purpose loans back in a relatively short period (1 to 5 years), though.   

As its name implies, a residential loan must be used to purchase your primary residence.  A “primary residence” isn't restricted to a traditional house, however.  It can include other dwelling places as long as they're your primary residence.  This includes condominiums, townhouses, RVs, mobile homes or (for the really adventurous) houseboats.   

With a residential loan, you'll have up to 15 years to fully repay it.  Please note, however, that residential loans aren't mortgages.  So your payments aren't tax-deductible.  Another thing you'll want to know is that they can only be used to buy or build a primary residence.  You can't use them for refinancing, renovations or to buy out someone else's share of your property. 

Okay, if you've read this far and are convinced that a TSP loan is for you, the next step is to apply.  You can do this one of two ways:

(1) Online.  You know where to go: www.tsp.gov.  From there, proceed to the Account Access area and have your social security number and TSP Pin handy.  You may be able to do the entire thing online, but certain factors (marital status, loan type, etc.) may require you to print a partially-filled application. If that's the case, complete the form and mail it (along with other necessary information) to the TSP Service Office.

(2) Offline.  Maybe you're the good old-fashioned type who doesn't like to do such transactions online.  No problem.  You can get a loan application form from your service/agency.  If you're willing to  go online for at least a few minutes, though, you can speed things up by printing the application yourself.  To do this, just go here if you're a civilian  http://www.tsp.gov/forms/index.html. or here if you're in the military:  http://www.tsp.gov/uniserv/forms/index.html. Look under Option 2 and use the drop-down menu to select TSP-20, Loan Application.  Just print the application and fill it out.  Also, make sure you send it in before the expiration date at the top.

Well, that's all for now.  Since this isn't the world's most exciting subject matter, we'll cover it in small, manageable chunks.  Tune in next week to learn about TSP loan interest rates and loan repayments.  

John, AKA “SystemTrader”