I have an IRA which is substantial. I’ve considered using a portion of the IRA to buy some real estate, which in my area is now 20% undervalued, by my calculation.
Is it legal or possible to have the IRA to have a mortgage? Put down 20, 30 or 40 percent, and then finance the rest, and the IRA makes the mortgage payments?
I bet the answer is no. But, if it is possible, it opens up a lot of possibilities for me, and makes it a very attractive option.
My advice is not to use your IRA to pay for mortgage. Your retirement is more important than owning a home because if you are broke when you retire, you have to work or live a crappy life off of social security (if it even pays out when you retire).
Since you really want to use your IRA to pay for your mortgage, expect a 10% penalty on early withdrawals on any gains and earnings. If you have a traditional IRA, expect income tax on top of the penalty. If you have a Roth IRA, it is possible to withdraw all your contributions without being affected by 10% penalty (just don’t withdraw the earnings or gains).
If you plan to use your IRA to purchase or build or rebuild your first home, you can withdraw a lifetime limit of $10,000 and don’t pay any taxes or penalties.
My advice is not to use your IRA to pay for mortgage. Your retirement is more important than owning a home because if you are broke when you retire, you have to work or live a crappy life off of social security (if it even pays out when you retire).
Since you really want to use your IRA to pay for your mortgage, expect a 10% penalty on early withdrawals on any gains and earnings. If you have a traditional IRA, expect income tax on top of the penalty. If you have a Roth IRA, it is possible to withdraw all your contributions without being affected by 10% penalty (just don’t withdraw the earnings or gains).
If you plan to use your IRA to purchase or build or rebuild your first home, you can withdraw a lifetime limit of $10,000 and don’t pay any taxes or penalties.
References :
http://finance1o1.blogspot.com