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Personal Finances / Buying or Selling a Home
|Subject: Re: Downpayment Sources||Date: 5/10/2013 8:42 PM|
|Author: foo1bar||Number: 125248 of 128403|
Well, excuuuuuuuuuuuuuuuuuuse me.
OK. You're excused.
I'll not have you mischaracterizing my remarks, which were strictly educational and meant to counter the numerous statements one sees with regard to these loans that "you're paying yourself."
I don't believe I mischaracterized them.
I pointed out that
1> you accurately described the situation (that interest going into the account is paid with post-tax dollars),
2> that the phrasing "you're paying taxes twice" is an emotional charged phrase
3> the "pay taxes twice" is often stated in a way that people think they will pay taxes twice on the WHOLE amount, not just the interest. (you were accurate in your statement, but it is easy for people to misunderstand, especially when that misunderstanding is reinforced by other statements a lurker might see elsewhere.)
Huh? You may choose to look at it this way, but I see it as paying pocket A with cash from pocket B, both pockets belonging to you, thus this "investment" yielding bupkes. Make enough of those investments and you'll be broke.
Well, your other option is that you pay Ginnie with cash from pocket A (your 401k) and she pays you back with interest.
And you pay interest (and principal) from pocket B (your checkbook) to Mr. Bank
If you're paying Mr. Bank more interest than you get from Ginnie, you're going to be poorer than if you are just moving the money from pocket A to pocket B.
Since a loan of some sort *must* be involved, either from the 401k or from elsewhere, IMO it's easier to analyze the two halve separately, and then put the two halves together.
BTW: isn't "paying pocket A with cash from pocket B" pretty much the definition of "you're paying yourself" - a phrase I gather that you think is emotionally charged/misleading. :)
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