Usually, I steer far away from advising homeowners to touch their 401(k)s. But if you're strapped for cash and looking for a home remodeling loan--and other methods have not worked out--your 401(k) is a legitimate source of funds.
No, I'm not talking about cashing out your 401(k). That is dangerous is two ways: 1.) You deplete your retirement account; 2.) You get hit hard on the taxes the following year.
Most 401(k)s allow for loans. But that's the key word: loan. When you log onto your 401(k) account or look at your monthly statement, it looks just like a savings account, doesn't it? After all, you and your employer chipped into it, just like you would with a savings account. But that's not the case. When you draw money, what you're doing is taking out a loan against these funds.
One good thing about using your 401(k) for home remodeling is that you don't need to worry about credit checks. Otherwise, proceed with caution when using your 401(k) for renovation projects.
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Thanks for sharing. Nice tips.