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Sage Realty LLC Discusses Pros and Cons of Using IRA Funds to Purchase A Home for Sale

Owning a home fulfills the American dream of having a place to call your own. One of the largest obstacles when acquiring a home is determining how to pay for and properly allocate resources for the best return on investment. A recent article from msn.com discusses how homebuyers have the option to tap into IRA funds in order to make a required down payment on a home. Sage Realty LLC discusses this decision further, and offers advice when looking to purchase a home for sale in and around the Main Line area.

Rent versus Buy

An initial decision is whether to rent or buy. This can be challenging because the best option is not always clear. (For example, if you are not planning on staying in the same geographical area for a long time, renting is usually the better choice).

If buying is the answer for you, the truth is you may be able to use money from your IRA without incurring a penalty when using the funds to buy your first home, (the IRS makes an exception for withdrawals up to $10,000 when the funds are used to purchase a home, according to the article from msn.com). However, using this method may not not be the best option. Especially if you have debt in other areas, such as credit cards and/or student loans.

Why Saying No is Sometimes Best

Remember that there are sacrifices when tapping into retirement savings. By removing money now, you are losing out on compounding interest. Money taken out now will be gone. However, that same amount of money will grow into a greater amount if saved in your IRA.

Rare Exceptions

As with any general rule of thumb, there are exceptions. In the case of pulling from your IRA to buy a home, the decision can be a good one if you have accumulated a large amount of savings in your account. A respectable guideline to follow is you should save 60 percent of your current annual income. If you have not, leave money in your IRA for the future. If you have already saved over 60 percent, make sure that you meet the criteria to avoid penalties and proceed confidently with your withdrawal decision to make your first home purchases, (remember, you must be a first-time homebuyer).

In the end, the decision is your own when deciding when and how to purchase a home for sale. Remember to try to stay within your budget, and think about your overall financial picture before dipping into funds allocated for the future. While being comfortable is important, remember that trading out future funds for current luxuries may not be the wisest decision. If you have questions regarding how to allocate funds for your first home purchase, contact Sage Realty LLC at 610-687-4000.

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Featured Testimonial

I moved to PA from Washington State and learned that realty is local. There were things that I thought I knew about buying a house previously but boy was I wrong. Linda was very patient with me but also did not hold back when she saw potential problems, and always made sure I had all the information I needed before making a decision and didn’t belittle concerns to just get a sale. Above all else, and this was the most important thing to me, Linda has a high ethical standard, is very transparent in her approach and is someone I trusted making one of the biggest decisions of my life. – A. Lindsay (Courtesy of Google)

 

Hear From Our Clients

  • "We were so pleased that a co-worker recommended someone in the area that she trusted. Boy, did we strike gold on all counts. You are amazing!"
  • "Instead of trying to take advantage of conflicts of interest, she puts the client's interests first."
  • "Linda is a hardworking, proactive and knowledgeable realtor. Throughout the process of finding and buying our new home, she was always responsive and kept us up to date on every detail."
  • "Linda and the group at Sage are the right fit. You won’t find more knowledgeable, prepared and professional agents."
  • "Linda and Tracey really know the Main Line area."
  • "Throughout the entire process we never doubted that she always had our best interests in mind. We wouldn’t consider anyone else when buying a home on the Main Line."
  • "From start to finish, Linda brought to bear a most helpful combination of experience, knowledge, attention and integrity on a somewhat complicated transaction. There was never any doubt that she represented our interests."
  • "Her knowledge of the area helped us quickly narrow our search and ultimately scored us an amazing home in an incredible neighborhood."
  • "It is hard to trust when you are not sure of the rules of the game. Working with Linda made us feel like we were family. Linda took her time to relay and explain everything in detail."
  • "Linda’s honesty and real estate savviness made for a wonderful home buying experience!"

Read more about what our clients have to say

Hear from our Clients

  • "We were so pleased that a co-worker recommended someone in the area that she trusted. Boy, did we strike gold on all counts. You are amazing!"
  • "Instead of trying to take advantage of conflicts of interest, she puts the client's interests first."
  • "Linda is a hardworking, proactive and knowledgeable realtor. Throughout the process of finding and buying our new home, she was always responsive and kept us up to date on every detail."
  • "Linda and the group at Sage are the right fit. You won’t find more knowledgeable, prepared and professional agents."
  • "Linda and Tracey really know the Main Line area."
  • "Throughout the entire process we never doubted that she always had our best interests in mind. We wouldn’t consider anyone else when buying a home on the Main Line."
  • "From start to finish, Linda brought to bear a most helpful combination of experience, knowledge, attention and integrity on a somewhat complicated transaction. There was never any doubt that she represented our interests."
  • "Her knowledge of the area helped us quickly narrow our search and ultimately scored us an amazing home in an incredible neighborhood."
  • "It is hard to trust when you are not sure of the rules of the game. Working with Linda made us feel like we were family. Linda took her time to relay and explain everything in detail."
  • "Linda’s honesty and real estate savviness made for a wonderful home buying experience!"

Read more about what our clients have to say

Sage Buyer Tips

Use Sage Buyer Tips to research the Main Line and stay up to date on real estate news. This online destination is chock full of resources for buyers and sellers: you can see our Main Line communities or explore Sage favorite places. Browse properties here and search other Main Line real estate. With Sage’s advice and experience, first-time buyers and those looking to upgrade can find homes best suited to their needs.