⚠️ The Opportunity Cost: That money is no longer invested. You miss out on potential market growth, which can cost you thousands in the long run.⚠️ The "Double Tax" Trap: You pay the loan back with after-tax dollars, and then you’ll be taxed again when you withdraw it in retirement.⚠️ The Job Change Risk: If you leave your job, many plans require you to pay the balance back in full very quickly—or it counts as a taxable distribution (plus a 10% penalty if you’re under 59½).
Check if your plan allows for a "Principal Residence Loan." These often have longer repayment terms (up to 15 years) than standard 403(b) loans. borrowing from 403b to buy house
✅ You pay yourself back: The interest you pay on the loan goes back into your own account, not to a bank.✅ Easier approval: There’s usually no credit check because you’re borrowing your own money.✅ Lower interest: Rates are often lower than traditional personal loans. ⚠️ The Opportunity Cost: That money is no
It’s a great tool if you’re just short of a down payment, but try to leave your nest egg alone if you have other options. ✅ You pay yourself back: The interest you