"J" <skyliner306[at]yahoo.com> writes:

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If you can't put down the 20% without stretching, it sounds
like you can't really afford the house.

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I don't know from "insane" but I'll vote strongly against
tapping your retirement savings to invest in real estate.
You're about to turn 40. That retirement savings has 25+
years to grow - that's its job. Let it do its job.

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Not under *any* circumstances. But under *most*. Find a
cheaper house. Or save some more for another couple of
years.

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Now *that* is insane.

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I lived very cheap - very much below my means - for years.
That allowed me to save enough money to afford the house
I'm in now.

I highly recommend against "stretching" hard financially.
Do you really want that stress? Start thinking about the
downside of such stretching. Imagine losing your job or
having some sudden additional expenses. You need to be
able to sleep at night - and sound sleep doesn't come from
a fancy house, but from the house not being at risk.

And seriously - the retirement money - if you're 40,
you're at the point where you should be maxing that
out as much as possible. Time is your friend here -
it needs time to grow. Not only shouldn't you be
pulling money out of there, you should be trying to
figure out how to maximize how much you put IN there.


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I would not take retirement distributions to pay for a portion of a
house. I am not a professional, my advice is purley what I
"personally" would do.

I have taken a 401k LOAN to pay for a portion of down payment on a
house. I repaid the loan with 18 months of borrowing the money to get
my retirement savings back into the account.

Did you ask about a 80-15-5 program to emove PMI? 80% on first
mortage, 15% on second, with 5% down?

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EXTREMELY well put
Cal

J wrote:
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If the mortgage payments are not affordable with 5-10% down, and you
would have to nearly empty your 403B to make enough down payment to
make the monthly payments affordable then the house is simply more than
you can afford. Shop around for a house or condo you can afford
without emptying your 403B account. If there is nothing available
within your price range then continue renting.

The purpose of a home is to add some comfort, stability, and security
to your life. If you buy more house than you can comfortably afford
you are probably more than offsetting any quality of life gains that
come from home ownership with the stress and aggravation that come with
living on the edge financially. What good is a nice house if what you
do in it is stress about how you are going to make the mortgage payment
this month, or how you are going to save enough for retirement?

Andy

I ain't nevah dundat...

however, the first thought that comes to mind, could you possibly
find a lower cost home. Say a fixer-upper?

Second, any funds withdrawn from your 401 at age 40, would
not only be income taxable, but would also carry a tax penalty.
So you would have to draw off almost DOUBLE what you need ! ! ! ! ! !
If 20$ down, waiving PMI only makes it reasonably affordable,
you just might be in over your head....

Cal




J wrote:
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Seems that the purchase of a first home should be an exciting prospect.
But I'm faced with a dilemma.

My two options are to put down 5-10% and be nearly financially
strangled with monthly mortgage payments, or stretch to put down %20
and waive PMI which makes the property *reasonably* affordable. I have
no rich uncles and expect no gifts or informal loans. What I DO have
is 15k in a bank account and the remainder of the downpayment would
come from 403B account distributions. I might even manage to leave
about 10k in my retirement account. I'm about to turn 40. Is it
insane to consider this as an option?

Some folks I have talked with say do it (some HAVE even done it, dumped
their whole retirement savings into real estate and of course it paid
off in spades with the bizarre growth in real estate in the last
decade). Others say tapping retirement money is a very bad idea under
any circumstances.

Obviously I am not rich but consider myself having done ok with
savings. Some of my colleagues don't even HAVE retirement accounts.

Any suggestions are appreciated. Maybe some first-hand experience out
there of how YOU did it.