Borrowing from a 401k loan can be a good solution in dire situations and offer a way to lower your interest payment. However, it can come with certain drawbacks:
- You can only borrow up to $50,000 or 50% of your account balance, whichever is less.
- The loan is payable within only 5 years and you need to make payments at least every quarter. I don't know how much you are planning to borrow, but because of the shorter payable period, the payments can be higher. Make sure that you can afford to do so in the next 5 years.
- The money is taken away from your 401k, which means you will be missing out on investment income. Even though you will be paying interest back to your account, like you said the interest is quite low, so it may not be as much as the return you are earning from the investments.
- You said job stability is not an issue, but maybe it's still worth mention that if you decide to leave your job, the loan will be due in full.
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