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Tap Retirement To Buy?

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Posted On: 09/17/2014

Question: We have saved money in retirement accounts, and the return in recent years has pretty much been zero. We now want to take money from these accounts to buy a home. Are we allowed to make such withdrawals, and will lenders allow us to use such funds for a down payment and closing costs?

Answer: As far as lenders are concerned a retirement account is simply a form of savings, one that is easy to document.

Financially, it might make a lot of sense to use retirement dollars to acquire a home. Think about it this way: If you take $20,000 from a retirement account to purchase a home, it means the amount you need to borrow is reduced by $20,000. At today’s interest rate, about 4.2 percent at this writing for 30-year fixed-rate financing, not borrowing an additional $20,000 saves around $840 in interest.

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That said, it may be neither easy nor desirable to tap into retirement money. Before looking at homes find out if you have the right to withdraw funds from your account. Is there a limit on the amount you can withdraw? How long does it take to get the money? How will your withdrawal be treated for tax purposes? Will you have to pay a penalty? For specifics regarding these and other questions speak with your financial adviser and a tax professional.

Question: Is an HOA required to provide handicapped parking spaces? I’m handicapped and would like to have a designated space at my condominium.

Answer: Homeowners associations effectively represent a layer of government and authority. If you buy a condominium unit then as a condition of ownership you agree to abide by HOA rules and regulations.

When it comes to condo parking spaces the usual standard is that HOAs are required to make “reasonable” accommodations for those with disabilities. The big question then becomes what’s “reasonable” and what isn’t.

For instance, are 2 percent of the association’s parking spaces allocated for handicap parking? If such spaces are not used can they be converted into guest spaces or assigned spaces for residents? Can such spaces be located next to a rear door instead of a front entrance?

The best approach is for the HOA and the resident to work out a sane and sensible solution that really is a reasonable accommodation. This way expensive and ugly litigation can be avoided and the resident can get dignified and easy access to their unit.

Peter G. Miller is the author of The Common-Sense Mortgage and a veteran real estate columnist. Have a question? Please write to peter@ctwfeatures.com.

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