Posted on: 15th Apr, 2011 04:35 pm
I have no savings, no debt and good credit. I am newly divorced. I want to take money out of my IRA to use as a down payment. I know I will be taxed but it is my only option. Is this acceptable and should I do it before I apply for a mortgage?
You should first establish adequate (liquid) savings before considering the purchase of a home, otherwise you could end up losing both the money you use to get into the home, along with home itself.
Home values/prices in many areas around the country are still in a decline. It's possible you could buy a home with a small down payment and quickly find you are underwater like millions of others around the country. Run into a problem where your income goes down or you lose your job, you could lose everything including a major blow to your credit rating which will hurt you in more ways than one and take years to recover from.
Home values/prices in many areas around the country are still in a decline. It's possible you could buy a home with a small down payment and quickly find you are underwater like millions of others around the country. Run into a problem where your income goes down or you lose your job, you could lose everything including a major blow to your credit rating which will hurt you in more ways than one and take years to recover from.
Yes it's ok. You can do it before or during. Lenders will want a trail of money so, expect to document the withdrawal and deposit.
tgpierre
In the event you still may be reading this, let me add by saying you may be able to take out a penalty free withdrawal of $10,000 to be used towards expenses related to the purchase of a home. I believe you must not have owned a home in the past two years. Since I am not a CPA or tax expert, you will need to verify this to see if it is still accurate.
I again reiterate, however, that without having adequate liquid savings first, purchasing a home (especially during these times) could prove to be a very risky and unwise decision.
The best advice I can give you is to think very seriously about this before moving ahead. Unless there is a special reason to purchase a home at this time, first build up a cushion for that rainy day, which is always just around the corner.
In the event you still may be reading this, let me add by saying you may be able to take out a penalty free withdrawal of $10,000 to be used towards expenses related to the purchase of a home. I believe you must not have owned a home in the past two years. Since I am not a CPA or tax expert, you will need to verify this to see if it is still accurate.
I again reiterate, however, that without having adequate liquid savings first, purchasing a home (especially during these times) could prove to be a very risky and unwise decision.
The best advice I can give you is to think very seriously about this before moving ahead. Unless there is a special reason to purchase a home at this time, first build up a cushion for that rainy day, which is always just around the corner.