Originally Posted By Jmo371:
pay off your credit cards, and let your 401k grow

Originally Posted By Greenspan:
What is the benefit of doing this in your mind?

Originally Posted By BlackDogFarms:



The benefit is to finally be at our homestead, where i can spend every afternoon and weekend where we want to be instead of just another temporary solution to living.  We have gone from renting,to living on the property in an RV, to living a few years working/traveling abroad and now we are finally home and I am ready to be where I want to be, Established. Basically I don't want to wait until i am 40. 

The reason we bought the current home we are living in is because we had to have a place to live once we returned from overseas. Its nice and fits our needs, but we both know its a stepping stone to being on the land. 

Originally Posted By Greenspan:


I just dont see how this makes a difference. You said you are building your home on the property?

Originally Posted By Tigers1363:
<--- No Expert

Doing that now would be taking money out of the TSP while it is in a low.  As the market moves up (assuming this will happen as the economy starts opening up) you will miss out on those gains.

Should it go up 5% for those 5 years, you are essentially paying 5.75% interest and not the .75% it appears.  And missing out on the compounding money.

(Again i'm no expert but that is the way I'm seeing it.  Someone smarter than me may be by shortly to correct me I'm sure)

Originally Posted By Greenspan:


Then you AREN'T building your home, you want to. 

I'm gonna give you my harsh financial opinion. You are broke as fuck and on the edge but blind to the risk in your situation. Your wants exceed your abilities and you are cash fucking poor. No I don't think you should borrow from your TSP. I understand your wants but there is a reason building dream homes is for rich people. 

Your best bet is to cash out your current home now and live with family or in a teepee on the land until you can get financing to build the home worked out.

You are reaching. It might work out and it might not but this is how families lose it all. Good luck.

Originally Posted By jbirdious:
Do a construction loan and leave your 401k alone

Quoted:
I am thinking of using my TSP - .gov 401k to pay off my land mortgage.
Already I am skeptical.

Current Mortgage at 3.79%, 15 year fixed @ $600/month... Balance $35k - worth $70k +,
3.79 for unimproved land is a great rate.

We have had the land for 5 years, it does not have a home on it and we will be building our dream home. 11 acres on a creek - 10 minutes from work, no HOA etc.  I am there every day tending to the garden and animals.  We already have the lot cleared and house plans picked out. Once our home is built on the land we would either sell or rent the house we are living in now.  
OK, so you have made the basic payments, with no additional payments toward principal? Where are you getting $70k "worth"? Did it appraise for that? Just saying, don't deceive yourself--it has value to you, but who would buy that particular piece of bare land right now?

The TSP Loan would be at 0.75% interest re-payed over 5 years at a monthly payment of $285/mo. Current total in TSP is $100k.  Currently contribute 10% of salary to the Roth TSP, most of my current TSP is in traditional unfortunately.  
Well, first of all, the TSP Loan Handbook says that you cannot use a TSP loan for the purchase of land only (see last paragraph, pg3).

Second, glad to see you are above 5% for agency/service match. That's good. However, you aren't even close to the annual maximum contribution.

We are currently living 5 minutes away in a nice home we recently purchased for $100k ... appraised at $180k.   Heavy military presence in the area so selling or renting is feasible.  Could rent the home we are living in now for about $700-900 more than the mortgage payment (30 year fixed @ 4.3%)
Again, don't think you should fool yourself; the appraised value isn't going to help you sell (being in a military town might be your saving grace though; and at least it is more liquid than undeveloped land).

You don't mention if you are uniformed services or fedgov, and you haven't mentioned a VA loan, so I assume this is a conventional loan. Recent news reports say that mortgage rates may continue to drop. Maybe 1% is't worth refinancing over, but 2% could be?

Annual income is $85k, wife is stay at home mom, ages are early 30s.  Wife expects to go to work part time in the next few months as a real estate agent. My job is secure, family is within an hour and we have good neighbors.
I am assuming you are likely to remain in the same income tax bracket even if/when the wife goes back to work. I am skeptical that real estate agent is a very viable choice in this economy. If she goes back to work though, will there be other expenses (child care, another vehicle), and does the net income really more than make up for that?


The other option is to just pay it down over time with wife's extra income once she starts working OR use a HELOC or refinance our current house to pay off the land.  Once the land is paid off we would then use that as our down payment of more than 20% to do the construction loan   (Main purpose of paying it off).
I think these are both even worse ideas than a TSP loan.


No car payments, but i do have $10k in 0% credit card debt form current home renovation with balance due May 2021. $22k in cash and about $8k in a separate vanguard account.
You should focus on eliminating the credit card debt right away, but unfortunately this will take from your cash pile, which is really important right now. Unless the renovations were necessary for the function of the house, I kind of think that was a poor reason to take on debt.

Also, do you have the option to put the Vanguard money into your TSP? I don't know the exact rules but I think if it is 401k money, it can be rolled into TSP. TSP may not have quite as low fees or as many fund options as Vanguard, but it may help you for simplicity of management.

What says the hive.

Originally Posted By GTLandser:
 

SO, yeah: you are cash poor right now, and that's a bad way to be. 

Quoted:
Biggest financial mistake I ever did in my life was cashing out my 401k during the financial crisis of 2008 to buy my home.

Originally Posted By SigOwner_P229:

Fyi, you may have good things to say but I quit reading bc the sucky orange text is hard to see.

That being said, you stated he can't use the loan to buy bare land. I think you are making the assumption that he would be using a TSP home loan. However, his indication that the term would be 5 years indicates he is using a GP loan which can be used for anything including hookers & blow if he so desires. TSP home loans are 15 years and as you indicated, are limited to use in the purchase or construction of a home.

Originally Posted By GTLandser:


Thank you, noted and fixed font color.

Originally Posted By BlackDogFarms:
and I have $25k cash left from the refi to throw towards the remaining mortgage or whatever else I want to do.  

Originally Posted By SigOwner_P229:

You can use it to hit that 0% CC debt when it comes around...

ETA, a rough mental rundown on those refi numbers indicates you may be extending the term. Is it being extended?

Originally Posted By BlackDogFarms:
I called the local credit union last week, I can do a cash out refinance on my current house. We bought it way under value. This Drops my interest rate a point, pays off my land mortgage, reduces my overall mortgage payments by $400 and I have $25k cash left from the refi to throw towards the remaining mortgage or whatever else I want to do.  

After talking with the wife we would rather wait a few years until we start building so we would just continue to save money with the perks mentioned above. 


No TSP loan ????, thanks for advice guys

Originally Posted By BlackDogFarms:


No this will not extend the terms.

I have only been in the house since March.  I have to wait to refi until September at the 6 month mark. 

We bought the house 45% off and renovated it over the past 2 months.

Originally Posted By BlackDogFarms:
Well its a loan so I don't pay any penalties. I am obligated to pay it back to myself.

Originally Posted By VegasEggus:


If I were in your situation I'd rather stop any further contributions and pile on paying off the land.  Then restart my contributions.

Originally Posted By jaqufrost:
I would probably look into refinancing your current home, then renting it out and building a new house on your property.

How expensive of a house are you wanting to build?

Originally Posted By BlackDogFarms:



@jaqufrost that is the plan.  Rental market is strong here due to large military presence, retirees and the coast. 


Worst case we sell the house, either way we would live comfortably in it until the new home is built.  At this point earliest we start is late next year ....more realistic would be 2-3 years. If rates get even lower then we will decide to build sooner rather than later. 

As far as price, I will shoot for $250k...we would like several items wrapped into the mortgage...small boat dock, driveway, garage, utilities so these are added expenses vs buying a home already built. You definitely pay more when you build your own but you get what you want. 

My dad is a GC and Father in Law is a master cabinet maker. So we will definitely do a lot of work ourselves after it is dried in saving some coin.  It just needs to be well thought out, executed and not too expensive.  

All this is completely feasible on one salary with a stay at home wife for now. If the wife works than even better.