Wonder how it works? We filled out a short online form with the 401(k) holding company. We then printed out a form to sign and return along with the required paperwork. We sent:
- Copies of the land deeds showing that the land was in our name
- A declaration of intent to build, which we had a neighbor notarize for us to show we were very very serious
- A cost estimation which I had done to satisfy bank #1
- Copy of the floor plan (this was not required, but I figured it would not hurt)
We will make bi-weekly payments with the amount taken out of W's check. We picked a repayment time that gave us the ability to make payments even if our financial situation tightened up a bit. Our goal remains to pay it back earlier.
The payments are $200/month less than we would have paid the bank. This is mainly due to the fact that the interest rate is 1.25% lower. All of the repayment amount including the interest will go into W's 401(k).
At this point it really was the best choice for us. My only regret is that we did not do this before we ever met with bank #1 . It was a lesson learned, and I prefer to focus on the fact that things work out for the best in the end.