Borrowing from your 401(k) or withdrawing money from your IRA before you have retired is generally a bad idea because it can set you back years in reaching your retirement savings goals. Not only do you lose the opportunity to earn 澳洲幸运5开奖号码历史查询:compound returns on the money you withdraw or borrow, but people 𓆏usually stop making contributions when they make a withdrawal or take a lo♊an from their plan, setting them even further back.

Depending on your age and how you plan to use the ♐money, you may also be subject to penalties andꦕ a higher-income tax bill.

澳洲幸运5开奖号码历史查询:Before you take any loan, take a hard look at ways to raise money by 澳洲幸运5开奖号码历史查询:increasing your income (temporarily taking a side job, for example) or reducing your expenses. What’s more, you might have possessions you could sell on eBay, Craigsꦜlist, Poshmark, or Facebook to earn extra cash.

澳洲幸运5开奖号码历史查询:Maybe you need a budget to help you track your inflows and outflows. If none of these optio🧔ns can get you all the money you need, below are the least expensive borrowing alternatives to consider.

1. Home Equity Loan

If you own a home, determine if you have enough 澳洲幸运5开奖号码历史查询:equity to borrow🦋 against yo🔯ur home’s value. Equity is the difference between the mortgage lꦯoan amount and the value of your home. Over time, you gain equity in your home by payiꦉng down your mortgage balance and through market appreciation of your home’s value.

In 2020, most lenders will require you to have at least 20% equity and retain that amount after taking out a 澳洲幸运5开奖号码历史查询:home equity loan. So if your home is worth $200,000, you will need to have $40,000 in equity plus whatever the minimum loaဣn amount is to be eligible for a h🍌ome equity loan. If a lender’s minimum home equity loan amount is $10,000, you’ll need to have $50,000 in equity.

The national average interest rate on a home-equity loan was about 5.96% as of Feb. 5, 2022, according to Bankrate, which is low compared to other forms of borrowing, such as credit cards.

However, homeowners can no longer deduct interest paid on a home equity loan (or 澳洲幸运5开奖号码历史查询:home equity line of credit)—unless the loan is used for renovation on the home anchoring the loan. The deduction was eliminated or banned from 2018 to the end of 2025 due to the passage of the 澳洲幸运5开奖号码历史查询:Tax Cuts and Jobs Act of 2017 by the U.S. Congress. If your financial need is for some other purpose, you no longer get a tax deduction.

To figure out if you have the required equity, estimate your home’🔯s value by looking at the Zestimate of your home’s market value using Zillow.com or use a real estate website to search for recent sales prices of homes similar to yours. Next, look at your last mortgage statement to see how much you still owe on your loan, and subtract the amount owed from the market value to get your equity.

Remember, lenders will want you to retain 20% equity in your home even after taking out the loan, so subtract the dollar amount that 20% translates into from your total equity to determine how much you might be able to borrow. Also, please keep in mind that lenders have minimums for home equity loans, so if you only have $1,000 in equity above the required 20%,✱ you might not be able to get a loan.

Home equity loans also have considerable closing costs, which you’l𝄹l need to factor in to see whether this borrowing option makes sense.

2. Cash-out Refinance

A similar option is to refinance your mortgage and take cash out at closing. If you go this route, you will increase your mortgage balance, and it will take you longer to pay off your mortඣgage unless you refinance into a shorter term.

The tax law has also changed the deductions for mortgages. From 2018 through 2025, you can only deduct mortgage interest from your taxes on loans of up to $750,000 if you itemize and the loan is for your primary residence. Previously that number was $1 million. However, if you are refinancing an existing loan larger than $750,000, the $1-million threshold still holds.

Whether it makes sense to do a cash-out refinance depends on how the interest rate on your current mortgage compares to the interest rate you could get on a new mortgage.📖 Remember that you may pay several thousand dollars in closing♔ costs to refinance your entire mortgage.

As the interest rates on 30-year first mortgages (what you’re getting when you do a cash-out refi) are around 3.84% in February 2022, according to Bankrate, while the interest rates on home equity loans are around 5.33%.

As a result, the closing costs of a cash-out refi might be worth it if you need to borrow a large sum. Be sure ܫto compare the closing costs, monthly payments, and total in෴terest costs over the life of the loan to determine whether a home equity loan or cash-out refi is the most cost-effective option.

Finally, if you’re currently paying mortgage insurance premiums and a cash-out refi would allow you to get rid of them, it could be a 澳洲幸运🍨5开奖号码历史查询:betteꦉr option than a home equity loan.

3. Personal Loan

What if you don’t own a home? Or, if you are a homeowner, maybe you don’t want to borrow more against your home, don’t have enough home equity to get a loan, can’t get a good interest rate on a refinance, or don’t want to pay closing costs? 澳洲幸运5开奖号码历史查询:A personal loan m𒆙ay be a good option.

Personal loans generally have higher interest rates than home loans because they are not secured. That means they aren’t tied to any collateral—anything you physically own, such as a house or car. If you default—or fail to make yඣour payments—on a home loan or an auto loan, the lender can seize your house or car and sell it to get some of the money back. If you dꦓefault on a personal loan, the lender can sue you, but there’s no car, house, or other assets of value that the lender can claim. As a result, there's a higher risk to the lender for personal loans, which translates to a higher interest rate for the borrower, and that interest is not tax-deductible.

Bankrate reported that personal loan rates ranged from 4.98% to 35.99% as of Feb. 2022. Personal loan rates depend on the lender and the borrower’s creditworthiness. If you have excellent credit, you may be able to get a personal loan for not much more than a mortgage but withouꦰt the expensive closing costs.

澳洲幸运5开奖号码历史查询:In January 2022, Investopedia recommended Discover as best overall for personal loans and Marcus as best for Debt Consolidation. For borrowers with good credit, LightStream is best—a🤪nd Avant for bad credit.

4. 0% APR Credit Card

If you have good-to-excellent credit, you could apply for a credit card in which 澳洲幸运5开奖号码历史查询:you might ♛q♔ualify for a 0% APR balance transfer or a 0% APR introductory rate. Either of these options could help you get the cash you need. The big question is whether you’ll be able to repay your credit card balance in full before the 0% APR period ends. This period might range from nine to 18♑ months, depending on the card.

Of the options we’ve presented in this article, a credit card is the riskiest becaus🌺e it puts you in a position to end up with high-interest debt if you don’t repay your loan💦 on time or if you’re late on one of your minimum monthly payments.

The Bottom Line

We’re not saying that you should never take a loan from your 401(k) or withdraw from your IRA. In some circumstances, 澳洲幸运5开奖号码历史查询:these may be your best options (withdrawing contributions from a Roth IRA, for example, are both penalty-free and tax-free at any time). However, if you are 澳洲幸运5开奖号码历史查询:looking for an alternative, consider a home equity loan, cash-out refinance, pers💮onal loan, or 0% APR credit card.