TSP loan


Q. I would like your opinion about borrowing from the TSP. This is my financial situation:

  • Second house mortgage, $33,000, at 8 percent interest.
  • First mortgage, $179,000, an ARM at 4 percent interest.
  • Student loan, $19,000, at 7 percent.

I am thinking about taking a $50,000 loan from the TSP and paying the second mortgage and the student loan. Another option is refinancing the mortgages at 4.5 percent fixed and just continue paying the student loan at the current rate. I am afraid of borrowing from the TSP and lose on potential future earnings, but I don’t want to continue paying so much money on interest.

A. I like the deductible mortgage interest at 4.5% fixed and don’t think that you should be too quick to borrow from the TSP for this, but I think I like the idea of trading the student loan debt for a TSP loan.


About Author

Mike Miles is a Certified Financial Planner licensee and principal adviser for Variplan LLC, an independent fiduciary in Vienna, Virginia. Email your financial questions to fedexperts@federaltimes.com and view his blog at money.federaltimes.com.

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