So our down payment is due by May 2nd (the date of closing the sale). We own stock and are selling it to get our cash to close. Unfortunately, it looks like it's going to take a bit longer to get our stock certificates processed than we estimated and we likely won't receive the proceeds of the stock sale until up to a week after the closing date. These proceeds represent roughly 65% of our cash-to-close money (including down payment and closing costs), and we're putting a good chunk down for the down payment.
Here's hoping the seller won't be ticked off by the delay, and that the great interest rate we got doesn't get blown by these issues.
Of course, if I could find someone willing to loan me the money for a week or so, I'd be in great shape. Any takers? (I'm kidding, of course. I wouldn't even feel comfortable asking *family* for that much money.)
(I know, I know, this sounds like one of those Ethiopian banker scams, doesn't it?)
edit: I apologize to those who have already posted, but I am making this topic into a mayfly since I typically don't like sharing financial information online. If nothing too specific is covered here, I can leave it up so as to avoid deleting others' posts.
posted
Do you have a 401k? You could look into getting a loan against that, and paying it right back. There'd be some fees, and I have no idea how fast you could get the cash, but thought I'd mention the idea.
There really *ought* to be a way for you to borrow this money short term...
I guess this is a point in favor of electronic stock trading, neh?
Posts: 4287 | Registered: Mar 2005
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Do NOT get the money from your 401K. Between taxes on the money you're pulling out, taxes on the income you'd have to earn to pay it back, and fees, you'll have to pull out almost $20,000 to get the use of $10,000.
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Added: Duh. Sorry. You meant a loan against your 401K, not actually cashing out your 401K. Still sounds messy - I'd put off closing. This happens a lot, I'm sure.
Posts: 26077 | Registered: Mar 2000
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I can pull a loan against my life insurance, which gets me 20% of the way to what we need. Just won't cut it, unfortunately.
My 403/b plan isn't built up enough to lend that much moolah either.
And yes, the stock we sold electronically was paid to us within 4 days. We thought this would go just as fast. Stupid us, I guess, huh?
Posts: 1099 | Registered: Apr 2005
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Umm. Any chance of getting an advance against either a credit card or a savings account? Horrible interest rates, probably, but for such a short term it might not be too bad.
Posts: 10645 | Registered: Jul 2004
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There is a type of loan specifically designed for this kind of problem. There generally used for when you are buying a house and selling a house and the house you buy closes before the house you are selling. I wish I could remember what they are called.
Ask your mortgage broker I'm sure they will know.
What you should ask about is a short term loan against the proceeds of your stock sale.
Posts: 12591 | Registered: Jan 2000
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Maybe a margin loan? Like what one would normally use in a margin trading account. Since the funds are secured by your stocks, the rate is much better than the credit card rates.
Of course there might be a chicken and the egg problem, if they are taking too much time to process the securities for sale, it might take too much time to get a loan against them too ...
Posts: 7593 | Registered: Sep 2006
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quote:Originally posted by katharina: Do NOT get the money from your 401K. Between taxes on the money you're pulling out, taxes on the income you'd have to earn to pay it back, and fees, you'll have to pull out almost $20,000 to get the use of $10,000.
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Added: Duh. Sorry. You meant a loan against your 401K, not actually cashing out your 401K. Still sounds messy - I'd put off closing. This happens a lot, I'm sure.
Yeah. I'd hesitate to advise cashing out the 401k for any purposes not related to survival or ethical obligations. Posts: 4287 | Registered: Mar 2005
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quote:Originally posted by katharina: Do NOT get the money from your 401K. Between taxes on the money you're pulling out, taxes on the income you'd have to earn to pay it back, and fees, you'll have to pull out almost $20,000 to get the use of $10,000.
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Added: Duh. Sorry. You meant a loan against your 401K, not actually cashing out your 401K. Still sounds messy - I'd put off closing. This happens a lot, I'm sure.
Yeah. I'd hesitate to advise cashing out the 401k for any purposes not related to survival or ethical obligations.
Especially since the 403/b (like a 401K) I started this year has actually lost a significant percentage of the money deposited...
Posts: 1099 | Registered: Apr 2005
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posted
I thought "getting a loan against your 401k" (as scifibum suggested) is totally different than "cashing it out". (which kat called it)
Taking it out is definitely bad. However, I know of people I work with who borrow against their 401k all the time. Like use it as collateral
Posts: 9538 | Registered: Aug 2003
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quote:There is a type of loan specifically designed for this kind of problem. There generally used for when you are buying a house and selling a house and the house you buy closes before the house you are selling. I wish I could remember what they are called.
It's called a "bridge loan" and it's extremely common.
Posts: 26071 | Registered: Oct 2003
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quote:It's called a "bridge loan" and it's extremely common.
That's exactly the word I was looking for. I don't know if they would offer a bridge loan when you are waiting for the sale of stock, but it seems like if they do it when you are waiting for the sale on a house it shouldn't be too much different.
Posts: 12591 | Registered: Jan 2000
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posted
Rabbit and Dag beat me to it. Ask your mortgage company representative about a bridge loan. Assuming that you can show them documentation on the stock sale it should be no problem.
Posts: 9866 | Registered: Apr 2002
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Thanks for the advice guys. I'll call my bank and inquire about the bridge loan and see if it is applicable in this case, what the interest is like, and if we'd be able to get cash out of that loan in time for a down-payment.
There's something just gut-wrenching, though, about taking out a loan to make a cash payment on an even larger loan, even though I know that the cash is coming in from another sale in short order.
Posts: 1099 | Registered: Apr 2005
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I learned the hard way this year that even rolling over a 401k (to an ira because i was no longer working for the company the 401k was with) gets you hit with the 10% penalty. Somehow I missed that part in the schpeel they gave me. It really hurt to do taxes this year.
Hope you get it worked out, BandoCommando - and congrats on the house! : )
Posts: 1355 | Registered: Jul 2006
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quote:I learned the hard way this year that even rolling over a 401k (to an ira because i was no longer working for the company the 401k was with) gets you hit with the 10% penalty. Somehow I missed that part in the schpeel they gave me. It really hurt to do taxes this year.
I recall doing a rollover that didn't cost me anything. I think it may depend on the type of IRA that you roll over to. 401k accounts are tax deferred. If you roll over into an account that is not tax deferred, such as a Roth IRA, then you would be liable for taxes on the balance of your 401k. Otherwise you'd never be taxed on the money. I don't think that rolling over from a 401k into a tax deferred (traditional) IRA would result in any out-of-pocket costs.
Posts: 3275 | Registered: May 2007
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