my dad wants to buy another house so we rent out our current home until the rest of the mortgage is paid off the house were looking is a great deal and the perfect home for us we need at $65,000 down payment he's got the money but he will have to cash out all his retierment savings I think he should because he will get this back plus allot more in the long what should he do ?
2006-09-25 17:15:12 · 4 answers · asked by Glen 3 in Business & Finance ➔ Investing
once our current house is payed off we calculate this will only take 7yrs he can sell it and have roughly 250,000 his other mortgage is for 195,000 so in 7 years it will down to say 100,000 probalbly less he sells are current house and pays off the other mortgage and hes left with 150,000 or more I dont see how this can be a bad idea real estate is a good investment and if ever falls unemployed hes cover with the money hes going to get from renting our current house ($1200/month+utl.) and the new house has a one bedroom apt. he can rent out ($500/month+utl. ) plus he's not taking 65,000 from rsp's its only 30,000
after taxes (6,000) the rest is cash. I do like the house and will be living it for a while I do pay rent ($500/month) but it benifts him more then me If I had the money to buy my parents a house I would they deserve it.
2006-09-25 18:37:24 · update #1
Does HE want to do this, or do YOU want to do this?
It depends on your dad's age. I think this is a REALLY REALLY bad idea if he is within 10 years of retirement. At that point, any loss is really hard to make up by retirement time.
Cashing out retirement plans for a house is not usually a good idea since you normally have to pay taxes on that money in the year it is withdrawn. So, depending on total income for that year, the $65,000 may only be $40,000 after taxes. Sometimes even less.
I would suggest trying to find a loan with lower down payment requirements (they're out there, you got to look a little harder). maybe if you live with your dad, you could kick in something for the downpayment and monthly payments and be a co-owner of the new house.
I would remind you that house you are looking at isn't such a great deal for your dad if it ties up all his cash retirement funds in a house that has to be sold in order for him to retire which may or may not be worth then what it is worth now. (they ARE predicting a housing downturn in the next 18 months or so)
Yes you get to live in a nice house, but what does HE get out of it?
2006-09-25 17:38:15 · answer #1 · answered by glenbarrington 7 · 0⤊ 0⤋
My dad always said is only worth money if you sell it. What happens if his health should fail?
It's too hard to replace retirement funds. Don't do it that way
2006-09-26 00:31:51 · answer #2 · answered by mjdp 4 · 0⤊ 0⤋
Not sure how old POP is? but I wouldnt be touching my retirement $.
if your old enough, get a job and buy your dad a house.
2006-09-26 00:23:26 · answer #3 · answered by Rob W 2 · 0⤊ 0⤋
No... Those funds are not there to withdraw
2006-09-26 00:22:48 · answer #4 · answered by j H 6 · 0⤊ 0⤋