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So, I expect a chorus of "retirement funds are for retirement!" I understand the sentiment, but at the end of the day, money is fungible, and I'm trying to figure out the best and safest way to use the assets we have to get the house we want.

Heh. Good that you are prepared for the chorus, as it will come. I confess I too favor thinking outside the box, having tapped retirement savings, such a paltry sum as it was, in my early 20's to get the down money for my first house. With penalty no less, yet am still on target to get us out of the rat race at 52. If you are disciplined enough, you can recover.

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 Downside is that the withdrawn funds aren't available to appreciate for a while and the loan is due if I lose my job. Failure to repay leads to both penalties and taxes. However, we would conserve the Roth monies and could liquidate the stock funds into savings, providing both an initial savings cushion and maintaining the Roth "true emergency" funds. I guess if I ever did lose my job, the play would then be to scrounge up money however possible including tapping the Roths to pay off the 401k loan.

If you indeed only have two choices, then I would personally pick number 2. It keeps your options open, so even though you lose earning power for a while, you still have a set amount in retirement funds unless all he!! breaks loose and you have to tap your Roth to pay off your 401K. However, are the 401K funds not considered borrowed? Won't the mortgage co have an issue with you borrowing down money? We've always had to show how our money got to the account we used to show we had funds needed, and they had to be seasoned. They look closely for borrowed funds these days, and you may even have to sign a document stating none of your down money is borrowed.

Of course, this also brings up the question of just how safe is your job, and are you willing to put your family at risk of the consequences of extending yourself in this manner?

What is the problem with putting only 10% down? Yes, mortgage insurance, but less risk as well, given greater $$ buffer in accounts. And if your goal is to get your kid into a good school district, are you 100% sure of the one you picked as being THE one? LOTS of fabulous school districts in that area, with housing getting cheaper as you go further out. Have you run the buy vs rent calculations to see which is actually the best bet? There is more than one way to get into a good school district.

So clearly I don't have nearly enough info to actually make suggestions other than proposing more questions to ask yourself.

who grew up in the Boston area
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