Before you apply for a home equity loan to buy another house, it’s worth considering the alternatives. They, too, have advantages and disadvantages.

The best source of cash to buy another house would be money that you have already saved and for which you have no other immediate need.

Retirement savings

Your retirement savings are a possibility. If you have a 401(k) plan at work, for example, your employer may allow you to borrow a portion of it through a 401(k) loan. Like home equity loans, retirement plan loans can be risky. You’ll typically need to pay back the loan within five years-even sooner if you lose your job. If you can’t pay it back, then you’ll owe income taxes and possible penalties. Continua a leggere