I am saving up for a downpayment on a house to be used in 1 year's time from now. I have $20K and I want to have $60K, I know I won't have all of it but I want to try. Even if I don't get to $60K I may get close enough so that I avoid PMI, that is one of the primary goals.
How can I determine whether it makes sense to reduce/eliminate 401K contributions for the next year and put that money towards the downpayment fund, then resume normal 401K contributions once the dust settles on the house purchase?
I currently contribute 15% of my income to a 401k. I have a 10% company match on the first 10% of my contributions. My income is about $100k/year before taxes.
As stated before I have $20K saved up for a downpayment on a house. This number does not include my 401k nor does it include my separate emergency fund.
I am 30 and I have $25K in my 401k. In the future I expect to be able to contribute $15K or more to the 401k per year.
My 401k match is $82 per month - that is 10% of my 10% - not a great match.
I calculated PMI on a $300K mortgage with several downpayments.
Downpayment: $49K, PMI: $79/mo. In this scenario the gains from the company match ($82) and the losses from the PMI basically cancel each other out.
But, what if I can't make a $49K downpayment - what if the difference is between a downpayment of say, $35k and $46K?
Downpayment: $35K, PMI: $134. Downpayment: $41K, PMI: $131.
More, but not much. God help me if I don't put up 10% of the loan value, though:
Downpayment: $29K, PMI: $205.
Based on this new information, I'm leaning strongly towards completely stopping all 401k contributions for the next year. I have $20K now and I'll have an additional $11K in a year by holding all 401k contributions until then. That puts me at $31K which is barely in the 90% LTV territory, but being in that territory is much better for my PMI bill than being below 90%. I'll then continue to save on top of that, and we'll see how close I get. Any thoughts on this strategy, or my calculations above?