Profile picture for JuliStehr

Is it a horrible idea to cash out an IRA for a down payment. Not a first time buyer

  • March 11 2014 - Spokane
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    1Yes

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Answers (5)

Juli,

You don't have to be a first time home buyer to obtain a zero down loan.  Home Advantage is available for anyone, first time home buyer or not.  The income limit is $97,000.  If that program does not interest you, there are also many other programs for which you may qualify that require little to no down payment.  You can see some of these programs at www.WSHFC,org.   

Although most will tell you that reallocating your assets from your IRA to Real Estate is not necessarily a bad decision, once you spend a dollar saved, it is so difficult to replace.  I would recommend this withdrawal from your IRA a last case scenario, especially since rates are still so low and funds you need for down payment so minimal, if any are required at all.  If you do decide to utilize your IRA, a break-even action plan should be a part of your overall qualification scenario.  In other words, how much, for how long, would you need to be able to pay back to your IRA monthly in order to save back what you liquidate.

I hope this helps.  Please let me know if you should have questions.

L. Wells
  • March 12 2014
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Whether or not this would be a good idea depends on the specifics of the situation and your finances. How much do you need for the down payment? Also, you should consider that you will most likely face penalties for taking out money if you are under a certain age limit. So the best thing for you to do is to speak with a knowledgeable lender to see if you can get started on financing a new home. If you need additional assistance, feel free to reach out. Good luck!
  • March 12 2014
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Profile picture for daveskow
several questions :

how much of a down payment is needed ?  how much is  in your other  savings  accounts ?   Have you checked with a CPA  as to any tax consequence on IRA withdrawal ?  Have you checked into  loan programs with lesser down payment requirements ?
  • March 12 2014
  • 0Yes

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Profile picture for wetdawgs
Whether or not it is "horrible" or not depends on your financial specifics.    Evaluate the whole picture.  

The life time limit from taking money from an IRA/401k is $10,000 for home down payment.
  • March 12 2014
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Juli,

You don't have to be a first time home buyer to obtain a zero down loan.  Home Advantage is available for anyone, first time home buyer or not.  The income limit is $97,000.  If that program does not interest you, there are also many other programs for which you may qualify that require little to no down payment.  You can see some of these programs at www.WSHFC,org.   

Although most will tell you that reallocating your assets from your IRA to Real Estate is not necessarily a bad decision, once you spend a dollar saved, it is so difficult to replace.  I would recommend this withdrawal from your IRA a last case scenario, especially since rates are still so low and funds you need for down payment so minimal, if any are required at all.  If you do decide to utilize your IRA, a break-even action plan should be a part of your overall qualification scenario.  In other words, how much, for how long, would you need to be able to pay back to your IRA monthly in order to save back what you liquidate.

I hope this helps.  Please let me know if you should have questions.

L. Wells

  • March 11 2014
  • 2Yes

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