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Werewolfdad t1_iufijtt wrote

Is this a margin loan?

If yes, do you understand how Margin calls work?

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hunybunnn t1_iufiuot wrote

I'm not sure what a margin loan is. The way it was explained to me, I could borrow my own money, repay w/interest, which I get to keep.

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Werewolfdad t1_iufkp2p wrote

What savings? Just cash? Then you’re just paying interest for no reason.

Or is this “savings” some sort of asset?

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hunybunnn t1_iuflgw9 wrote

My money is invested in a pre-tax 401k, and also post-tax Roth IRA. There is enough money to draw from either bucket. I'm hesitant to sell because I've lost about 20-30% with the recent stock market fall.

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Werewolfdad t1_iufloo3 wrote

You can't borrow against an IRA and borrowing against 401k can be quite expensive in the long run since your money is out of the market.

I'd look into helocs

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hunybunnn t1_iufmesq wrote

A heloc is an option, but there would be points and interest at probably 8% or more. Also, I've worked so hard to pay off the house and psychologically I don't want to borrow against it. I could just pull the $30k out and gradually pay it back with my monthly contributions, but not sure if it is wiser to do that, or to go with what Transamerica is offering (borrowing my own money, can default, since it's my own money, and any interest comes back to me.)

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Werewolfdad t1_iufmi74 wrote

  1. If you default you'll be subject to income taxes and a 10% penalty, which is way more than 8% interest.

If you have no mortgage, you should be able to find a heloc at prime minus, unless your credit is poor

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hunybunnn t1_iufoaze wrote

My credit is excellent. What about the points and charges in borrowing 30K? Is it wiser to take out the HELOC or just pull the $$ out and re-invest/replenish that amount over the next 15 months? The Transamerica guy make the "loan from myself" sound pretty decent because he said all the interest goes back to my account.

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Werewolfdad t1_iufqyan wrote

> What about the points and charges in borrowing 30K?

Most helocs don't have points or any sort of closing costs (at least any that ive seen).

>Is it wiser to take out the HELOC or just pull the $$ out and re-invest/replenish that amount over the next 15 months?

Heloc, especially if you have excellent credit. May just need a better lender.

> The Transamerica guy make the "loan from myself" sound pretty decent because he said all the interest goes back to my account.

Sure but he also left out the part where if the market turns around, you miss out on all those gains

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hunybunnn t1_iufmurt wrote

At my current contribution, I would pay back the $30k in about 15 months.

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