401k Loan vs. Equity Sharing Agreement vs. Selling Property Outright: Considerations
When it comes to retirement planning, 401k loans and equity sharing agreements are popular options. However, selling property outright may be the best option for some people. Here are some things to consider before making a decision.
With a 401k loan, you can borrow up to $50,000 or half of your vested balance, whichever is less. The interest rate is usually low, and you pay the interest to yourself. You have five years to repay the loan, but if you leave your job, the loan must be repaid immediately.
Equity Sharing Agreement
An equity sharing agreement allows you to sell a portion of your home’s future value in exchange for cash now. You retain ownership of the property, and when it is sold, you split the proceeds with the buyer according to the agreement. This option can be beneficial if you need money for retirement but do not want to sell your home.
Selling Property Outright
Selling your property outright may be the best option if you need a large sum of money and do not want to keep the property. You will receive all of the proceeds from the sale, but you will no longer own the property. This option can be beneficial if you do not want the hassle of maintaining a property or if you do not think the property will appreciate in value.