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Author: JAFO31 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 127262  
Subject: Re: Downpayment Sources Date: 5/10/2013 1:43 PM
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Brewologist: "2. My 401k offers the option to take a loan of up to $50k at 4.25% that our mortgage broker says can be used for part of the 20%. If we chose to do that, we could cover the whole downpayment out of the loan plus liquid savings. Downside is that the withdrawn funds aren't available to appreciate for a while and the loan is due if I lose my job."

You will be paying yourself interest on the 401k loan, so I would suggest that the funds are appreciating at a rate equal to the interest rate. Or perhaps you meant "aren't available [for me to invest in the market] to appreciate [or depreciate] for a while"?

And there is a further potential opportunity cost if the amount you could have earned in the market is greater than the interest you are paying yourself (instead of to a different lender).

Regards, JAFO
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