Do you have a financial planner? This is a big decision that deserves the consideration of a professional. One thing to think about is what would happen if the new job didn't work out.

After a multi year lending spree, banks are starting to get cranky. Some of them are eliminating piggyback loans; others are cutting back on HELOCs. You might look around to see what kind of a deal you could get. It's too bad Dave is gone from the forum, as this kind of question is right up his alley.

If you go the HELOC route, make sure you secure the HELOC before you list your existing home. Once the house is for sale, you can't tap into the equity.

Absolutely do not touch your 401K's. You contributed to them in pre-tax dollars and will have to re-pay with after-tax dollars. Don't do it.

Kaleberg - I saw a post in the financial forum about Dave being gone. Any idea what happened? I'm shocked! He was always so helpful.

Yep, he posted some helpful info three years ago when I bought the house in question... wasn't really on my mind that I'd still be here thinking of selling!

I saw the same post you did, Sparksals, and I am as shocked as you are. Does anyone else know what happened?

When I was in this situation last year, my debt-to-income ratio with two mortgages was quite horrible (52/62 front/back). My credit score was above 700 and my downpayment was 20%. I did have 70% equity in my old home, though.
I qualified for a conventional 30yr mortgage at 6.25% w/o points.
I already paid that off two months ago after I finally sold my other house so my debt/income ratio now is essentially zero :).
The approx. three months that it took to sell my old house weren't fun being up to my eyeballs in debt.

So if you have a good credit score and a 20% downpayment, you probably won't need an exotic loan.

Perhaps you could work out something with the seller, such as a rent with option to buy? Sounds to me like you might be moving to an area with a slow housing market, so some sellers might be willing to make a deal like that.

It would be good to consult with a reputable mortgage broker or perhaps with a very experienced and knowledgeable realtor in the area where you'll be buying for some other ideas..

Earlier this year I was contemplating buying another house before selling our current home. The site below provided very helpful information while I was exploring various financing options. The Strategic Equity & Mortgage Planner for this company is knowledgeable and experienced, and was very generouys with his time in explaining different options and programs to me.

**DISCLAIMER: I have no personal or professional affiliation with this company, and have not closed any funding vehicle with them. I just found their information and services to be helpful to me.

Here is a link that might be useful: Mortgage Information from On-Line Mortgage Brokerage

Just some advice for future, I use a private lender myself (retired real estate agent). He bridged for me with no extra points and because I have made my payments on time for the past 10 years with him, he will finance just about anything that is economically sound for me (flips, businesses, etc.). One comment is to make sure you absolutely KNOW THE NUMBERS to show the lender you understand money and financing because believe me, they know it better than you or they wouldn't have the money in the first place.

If you do not know private lenders, I would ask every close friend I have to recommend someone as most good privates won't finance without a good referral.

Kaleberg,

I emailed Dave and he responded that he has no idea why he was banned, he has enquired and received absolutely no response whatsoever from the mods.

If he was banned when Spike was here, he should have gotten an email. If he didn't, it's possible he shares an IP with a spammer which has happened to me elsewhere.

Is he able to read?

OP: "We could get money using 401K loans if necessary for a down payment."

sparksals: "Absolutely do not touch your 401K's. You contributed to them in pre-tax dollars and will have to re-pay with after-tax dollars. Don't do it."

That info is incorrect. A 401(k) loan is not considered a distribution. There are no tax consequences involved since it is a loan that you will be paying back into your 401(k) account. Now whether it would actually be prudent for you to borrow against your 401(k) is an entirely different matter. Since you are reluctant to discuss your complete financial situation, that is a matter to be discussed with a financial planner as kaleberg has suggested.

Thanks for spurring me to do some research. :)

I understand that the 401k loan is not a distribution and should have no withdrawal penalties, but I would repay with after-tax dollars, and again pay taxes on that money when I eventually withdraw it. Also, even the interest is not deductible (one source claims it is if I buy a house, one source says it's not even if I buy a house).

Also, after I change jobs, all of my 401k money will be with former employers who generally won't make 401k loans to former employees, so I'd have to roll everything into the a new 401k first, assuming my new employer would allow that (gotta check on it).

The sheer hassle makes me want to avoid this option, in addition to the usual 401k loan drawbacks.

Monzamess, the interest is not deductible because you are paying it to yourself. In essence, you are not paying any interest at all on a 401(k) loan; you are merely repaying the loan and adding in the earnings that the money would have earned had you not taken the principal out of your account.

Absolutely right. You're paying the 410K loan back to yourself. Of course you pay it back with after-tax dollars, the same as you'd pay any loan back with after-tax dollars, with the sole exception of tax-deductable mortgage loans.

In down equities markets, such as we experienced in the early 2000s, you would have gotten a much better return on your 401K by paying a loan back to yourself with interest rather than leaving the principal in the 401K and watching it dwindle away. OTOH, when the markets are good, it's much harder to make a case for doing it. This especially so considering that borrowing the same money by way of a HELOC does have the advantage of tax deductability, assuming you itemize your deductions.

The one other negative working against 410K loans is that many plans require you to repay the whole thing when you leave your employment. For anyone who's job isn't secure, it's really a risky thing to do.

Of course, the the big investment houses like to promolgate the myth that borrowing from your 401K is never to be considered under any circumstances. But it's obvious that they have a conflict of interest -- during the time you have an outstanding loan, they're not making any money on it.

roselvr - he can read, just can't post.

bethesdaman - You're saying it's incorrect that the repayment is made with after-tax dollars? How is it possible?

sparkals: "bethesdaman - You're saying it's incorrect that the repayment is made with after-tax dollars? How is it possible?"

Well, actually, I misread your statement. I thought you were warning the OP not to borrow against her 401(k) because it would be a taxable event. However, I think your warning is still irrelevant. The fact that the OP would be using after tax dollars to repay the loan is really only a matter of semantics. For example, if she borrowed $30,000 dollars that she had previously put in the account on a pre-tax basis, she would merely be repaying the same tax-deferred $30,000 (plus interest) over the course of her loan. There really is no downside to the fact that she is repaying it from her paycheck in so-called after tax dollars. On what is your objection based?

"but I would repay with after-tax dollars, and again pay taxes on that money when I eventually withdraw it."

If instead of borrowing from your 401k you took out a bank loan, you'd still be paying it with after tax dollars, wouldn't you? The money you left in the 401k would hopefully grow in value. When you eventually withdraw it, you're still going to have to pay taxes on the money it made you, aren't you?

But don't forget, you 401K money isn't guaranteed to make a profit. It might go down in value, maybe even drastically, as in 2000. If you had loaned yourself 50K in early 2000 and repayed it to yourself over five years at a reasonable interest rate, you'd be way ahead of where you would have been if you instead had left the 50K in the 401K, only to watch it to dwindling away, all the time makinge payments to the bank and letting them profit on the interest.

The stock market's been doing well lately, so borrowing from the 401K isn't such an attractive option right now. But to rule it out automatically no matter what the current financial environment might because of pat statemnts like "you put it in with pretax dollars and have to pay it back with after-tax dollars" isn't making an informed decision. People should compare the various ways of borrowing money and see where they come out best.

bethesda - well, I wouldn't consider it an objection, but I do see it as more than a matter of semantics. Contributing to your 401K is with pre-tax dollars. You lose the income from the (possible) growth of the money that would otherwise be in the 401K plus the repayment with after-tax dollars. I see it as costing more money in terms of lost growth of the funds in the 401K and the fact that they must be repaid with aftertax dollars when they were contributed pre-tax.

My email addy is on my member page - have him email me. I have a few ideas.