Home Equity Loan OR 401(k) withdrawal for remodeling

[Danny S.]

Hi BP,

I'm currently fixing up my primary residence to make it rent ready within the next year. I'd like to add on to one of my bathrooms and renovate my 3-seasons room as well. I looked into taking out a home equity loan, have about $30k available, to fund this project OR withdrawing from my 401(k) (return of life of the account is 6%) . I understand the penalties related to withdrawing funds early from a 401(k) but is it worth it versus taking out a loan? Any advice would be much appreciated, thanks!

- Danny