advice please

[Lucylaj]

My father - in -law passed away and my husband is 1/7 owner of his home. We are wanting to buy this home which s being sold for 160,000.00 (the appraised value is 185,000.00). Because of issues within the family, in order to buy this home we would need to get it before we sell our current home. We have approximately 113,000.00 in a ROTH CD. We are considering taking the 10% penalty and using the remaining money to pay off our current home and to use as down payment for my father-in-law's home. Doing this will allow us to get the home before we sell ours. Once our home sells, we will put the money back into a ROTH CD (or some other type of retirement account). Is this a wise decision?

I appreciate any input and advice.

[bjl584]

I would first ask why you want/need to move out of your current home?

10% on $113,000 is a pretty big hit to take if you don't need to.

Without knowing more details, my initial reaction is that this is a bad idea. Anytime I hear people contemplating draining a retirement account for something other than retirement, it sends up a red flag.

[skydivingchic]

Someone correct me if I'm wrong, but I'm pretty sure that once you pull the money out of the Roth account, you can't put it back. You can contribute $5,000 per year per person. So for the two of you, $10,000 per year.

I agree with the previous poster that this is a bad idea and one you shouldn't be contemplating.

[MonkeyMama]

Since it is a ROTH, the penalty is probably not that steep.

That said, once you take the money out, you can't put it all back in. You can only put in $5k per year, per person (generally). As such, doesn't sound like a good idea.

[snafu]

How much equity do you have in your current home? Is your home in 'ready-to-sell' condition? Using retirement funds for another purpose is a terrible idea. What is the average length of time needed to sell a home in your district? Is your late FIL's house already on the market? Has the executor of the estate already received offers? Do you have financing in place for the difference between what your receive from the sale of your current home and sum needed for late FIL's house?

If the other 6 who expect proceeds from this sale object to your buying the house, is it truly worth wrenching the family fabric? I hope you will take another route to a new house.

[DebbieL]

I agree with the others - don't raid the ROTH. Here in Canada we're lucky. We have what's similar to a ROTH called a TFSA. For ours, if you take the money out, the contribution room returns to you the next year. In other words if I took out $20,000 in December, that $20,000 contribution room would be available to me again in January (plus the additional $5,000 for that year). Finally, the Canadians get a better deal on something than Americans, lol. Don't feel jealous though, I'm currently paying $1.24/litre at the gas pump ($4.70/gallon) - and that's for low grade gas (87 octane).

[jpg7n16]

Can you not ask the other 6 members of the family if they could postpone the sale of the home until your's sells?

Maybe there is some way to sign a letter of intent on purchasing the home, that could delay the sale until your property sells. I'm really not sure if this is possible, so maybe you can ask the attorney who drew up the will (hopefully you have an estate attorney).

But I agree with Brian, I'd also like to hear why you're wanting to sell your current home in the first place.

[maat55]

I would find any other option than cashing in the Roth. At worst, I would only cash in enough to make payments until you sell your existing home.

Try renting the house from your siblings until you sell.