Land buying question

[C4Ranch]

Are you planning to pay off early or hold it the full 20 yrs?

I used an Ag credit coop and got a much better rate by taking a 5yr fixed rate over 20 years. Rates will go up after 5yrs most likely but i plan to payoff within 5.

J

 

[ultrarunner]

The only 5 year fixed worked great for me...

Started out at a great rate for 5 years and then dropped every year after until it hit 3%... decided that was the right time to paydown and refi the balance with a 15 year @ 2.75%

 

[wmonroe]

My plan is to pay it off early but we don't have kids yet but hopefully soon, so I'd like to use the 20 year note and pay extra on it but if kids come along and there are months with other priorities we could fall back to a lower payment.

 

[JMER817]

Can you take a loan out on your 401k? You will read that you shouldn't do this. I don't agree with that. You save on the interest that you would pay the bank if you financed and you pay yourself interest on the 401k loan.

 

[two_bit_score]

Can you take a loan out on your 401k? You will read that you shouldn't do this. I don't agree with that. You save on the interest that you would pay the bank if you financed and you pay yourself interest on the 401k loan.

You know in years past I would say you are absolutely right because I would think the market appreciation of the land would be a hedge against inflation and would equal or beat the appreciation of the stocks.

Now, with the probability of property taxes soaring and potential of losing income tax deductibility even for property taxes, maybe lack of appreciation on land, and illiquidity I tend to agree with the idea of leaving money in the market. But that is a pure gamble too with the current regime in power.

The government could confiscate your 401K very easily.

 

[sfloggie]

Dave,

Farm Credit shares their profit so we have averaged a refund check of $3700 each May. Additionally, we receive a call when rates have lowered a lot below a currently held rate with an offer to adjust down. We did so last year and saved several hundred a month.

 

[MossRoad]

Eight reasons to never borrow from your 401K.

8 Reasons To Never Borrow From Your 401(k)

401k loans have to be paid back in 2 months if you quit or lose your job. If you can't repay the loan in 2 months, it will be treated as an early withdrawal that is considered income (you pay income taxes on it) and if you're under 59.5, you'll pay an additional 10% early withdrawal penalty.

https://ttlc.intuit.com/questions/1...u-have-a-401-k-loan-and-quit-or-lose-your-job

 

[wmonroe]

Can you take a loan out on your 401k? You will read that you shouldn't do this. I don't agree with that. You save on the interest that you would pay the bank if you financed and you pay yourself interest on the 401k loan.

Yes, I can borrow from it but i don't want to mess up its future value. Interest rates are still pretty low and the 401 has been doing much better than interest rates.

 

[wmonroe]

Eight reasons to never borrow from your 401K. 8 Reasons To Never Borrow From Your 401(k) 401k loans have to be paid back in 2 months if you quit or lose your job. If you can't repay the loan in 2 months, it will be treated as an early withdrawal that is considered income (you pay income taxes on it) and if you're under 59.5, you'll pay an additional 10% early withdrawal penalty. https://ttlc.intuit.com/questions/1899463-tax-consequences-when-you-have-a-401-k-loan-and-quit-or-lose-your-job

Those are 8 good reasons. I pay taxes before it goes into my 401 so I don't have to pay the taxes later (except interest), that is unless the government changes something and screws us worse.

 

[ultrarunner]

A family member is in the same situation... 65 acres ag with an old homestead.

Was not getting anywhere with lenders.

The seller, after getting to know everyone offered to carry for 5 years with 1/3 down...

Looks like the deal will go through.