How to prevent foreclosure - Borrow from your retirement plan

This is a relatively simple, but often overlooked solution to stop foreclosure.  Most, if not all, retirement plans allow the funds to be borrowed in the event of an emergency, and preventing foreclosure is a valid reason.

Most retirement plans charge interest, but the funds go directly back into the retirement account, so there is no real cost to the homeowner who borrows these funds. 

The homeowner would be required to repay the money in monthly installments, if money is tight, one way to handle the payments would be to reduce the voluntary contribution to the retirement plan, although this will ultimately reduce the amount of retirement benefits available.  

Prevent foreclosure, but don't lose your retirement funds

The best reason to use retirement funds is to protect your equity in the property.  If you have no equity in the property, or if you have negative equity (owe more than it's worth), then you are ill-advised to use retirement savings.

You should only use retirement funds if you believe you can afford the house - and think this is the best option for you. 

If there is any doubt, do not use these funds because you could end up losing both the house through foreclosure and the retirement funds.  

Comments

[foreclosure refinance]

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