Convince me not to raid my Roth to buy first condo

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wackeym
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Convince me not to raid my Roth to buy first condo

Post by wackeym » Fri Sep 27, 2019 4:21 pm

State IL (Chicago)

Income 100K
TIRA 76k VTTSX
Roth IRA 52k VTTSX
401(k) 25k VTTSX
HSA 22k VTTSX
Cash 32k (Online Savings Account)

No debt
Age: 33
Single

I have been living with roommates since I graduated college 10 years, but I think my living situation will change at the end of July next year as my roommates will likely be moving in with their significant others. I am currently paying $1,000/month for my lease, but expect an increase of ~$600 if I will need to get my own place. It is possible that I could pay less but I think that $1,600 is a good ballpark estimate for a 1bd in a desirable area of Chicago.

Since I anticipate my housing costs to increase significantly, naturally I have thought about purchasing a condo. However I don't think I have enough cash on hand to purchase something I would be interested in. So I have been thinking about going to the Roth to fund part of the down payment. Deep down I think this is a poor idea, but given the cost increases I think it may make sense. With the increased rent I will not be able to save as much on a monthly basis.

1) Am I ready to purchase a home yet?

2) Why shouldn't I raid my Roth to accomplish this goal?

3) Looking for recommendation on overall financial situation and what others would do in this situation.

Thanks!

mchampse
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Re: Convince me not to raid my Roth to buy first condo

Post by mchampse » Fri Sep 27, 2019 4:24 pm

What’s the price range of housing that you are looking for? What would approximate payments be?

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wackeym
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Re: Convince me not to raid my Roth to buy first condo

Post by wackeym » Fri Sep 27, 2019 4:30 pm

I am thinking around 300k, would like to put 20% down.

HOA fees are variable but probably at least another $200 a month

Ideally I would like to see my monthly PITI under $2,000, probably $1,800

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MNGopher
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Re: Convince me not to raid my Roth to buy first condo

Post by MNGopher » Fri Sep 27, 2019 4:31 pm

You only get so much Roth space per year. It's very valuable in your younger/lower income years. Your 50-60 year old self will be very happy if you don't raid your Roth to buy a house.

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Re: Convince me not to raid my Roth to buy first condo

Post by eye.surgeon » Fri Sep 27, 2019 4:35 pm

a Roth IRA allows $10k to be withdrawn penalty free as a down payment on your first home. IMO it's a perfectly reasonable use of that money. It is in fact one reason why I have helped fund my children's Roth IRA. I wouldn't recommend any other premature use of Roth funds but I think people need to relax a bit about use of Roth funds for a home down payment as there is an accommodation for it and it happens to be a very advantaged way to save $10k for a home.
Last edited by eye.surgeon on Fri Sep 27, 2019 4:38 pm, edited 3 times in total.
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Re: Convince me not to raid my Roth to buy first condo

Post by samsoes » Fri Sep 27, 2019 4:35 pm

Don't raid your Roth to buy first condo.

See, that was simple.

Seriously, it seems like you know the answer already. Avoid the temptation for instant gratification. You'll be glad you did.
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Re: Convince me not to raid my Roth to buy first condo

Post by samsoes » Fri Sep 27, 2019 4:49 pm

MNGopher wrote:
Fri Sep 27, 2019 4:31 pm
You only get so much Roth space per year. It's very valuable in your younger/lower income years. Your 50-60 year old self will be very happy if you don't raid your Roth to buy a house.
Ain't that the truth.

I started my Roth, contributing the maximum, in 1998. However, I was precluded from contributing to it from 2000 - 2008 due to exceeding the income limit. If I was able to contribute during those 9 years, my Roth balance would likely be several times the amount it is now.
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Re: Convince me not to raid my Roth to buy first condo

Post by KlangFool » Fri Sep 27, 2019 4:57 pm

wackeym wrote:
Fri Sep 27, 2019 4:30 pm
I am thinking around 300k, would like to put 20% down.

HOA fees are variable but probably at least another $200 a month

Ideally I would like to see my monthly PITI under $2,000, probably $1,800
Why would you buy a condo when it is more expensive than renting at $1,600 per month? I would only buy if the PITI is 20% to 30% lowered than renting.

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Re: Convince me not to raid my Roth to buy first condo

Post by KlangFool » Fri Sep 27, 2019 4:59 pm

eye.surgeon wrote:
Fri Sep 27, 2019 4:35 pm
a Roth IRA allows $10k to be withdrawn penalty free as a down payment on your first home. IMO it's a perfectly reasonable use of that money. It is in fact one reason why I have helped fund my children's Roth IRA. I wouldn't recommend any other premature use of Roth funds but I think people need to relax a bit about use of Roth funds for a home down payment as there is an accommodation for it and it happens to be a very advantaged way to save $10k for a home.
eye.surgeon,

Roth IRA contribution can be withdrawn at any time for any reason without penalty. It is not limited to 10K.

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Re: Convince me not to raid my Roth to buy first condo

Post by illumination » Fri Sep 27, 2019 5:44 pm

I don't know anything about that area's market, but if you are planning to stay there for a while and you have been living with roommates for 10 years post college, I'd probably be making the same decision.

It's not like the money is being thrown away, you are purchasing something that let's you build equity instead of throwing it away on rent every month. And life is about more than total rate of return, having your own place is a much better way of life.

Most of the caveats are about home ownership itself, just make sure you understand all the costs that go along with that besides just the mortgage.

I would definitely say "don't do this" if you were buying a rental property as an investment opportunity and wanted to use Roth funds.

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Re: Convince me not to raid my Roth to buy first condo

Post by Brianmcg321 » Fri Sep 27, 2019 5:46 pm

Your stealing from your 60yr old self. Stealing from seniors is wrong.
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Re: Convince me not to raid my Roth to buy first condo

Post by Wiggums » Fri Sep 27, 2019 5:58 pm

I would not raid your Roth account for the down payment.

This might be a good time to create a budget,if you don’t have one, and analyze your expenses.

Renting might be the best option. You’ll have more costs as a condo owner.

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Re: Convince me not to raid my Roth to buy first condo

Post by grabiner » Fri Sep 27, 2019 6:34 pm

eye.surgeon wrote:
Fri Sep 27, 2019 4:35 pm
a Roth IRA allows $10k to be withdrawn penalty free as a down payment on your first home.
You can use $10K of earnings, plus all contributions, so it is a more substantial down payment.

I don't think you should raid your Roth IRA, but it may be reasonable to use your Roth IRA. It is fine to save money for non-retirement purposes in a Roth IRA, with the intention of withdrawing it later, rather than not contributing to a Roth IRA at all and saving the same money in a taxable account. If you use the Roth IRA money, you are better off than if you had used taxable savings; if you don't use it, then you have the money growing tax-free for retirement.

So, do you need the money you saved in the Roth IRA for your retirement? It isn't necessary to max out your Roth IRA and 401(k) every year, as long as you are accumulating for retirement in some way; this includes your 401(k), but it also includes building home equity, as if you own a home when you retire, you will need less from your portfolio.

But you also need to work out a budget. If an apartment rents for $1600 in the neighborhoods you are looking at, a condo which is acceptable to you is probably about $250K. You can make the down payment by withdrawing from your Roth IRA (or taking a loan from your 401(k) if your employer offers that), but will you still be able to afford the mortgage, condo fees, repairs, and contribute enough to at least max out your HSA and get the employer match on your 401(k) (both free money)?
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Re: Convince me not to raid my Roth to buy first condo

Post by Hector » Fri Sep 27, 2019 7:10 pm

Any plan of kids, need of bigger place in future?
If so, when and what would you do then?

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Re: Convince me not to raid my Roth to buy first condo

Post by Mr. Rumples » Fri Sep 27, 2019 7:18 pm

A condo is an investment of time, money and energy. If you decide to use your retirement savings make sure its a good one. Are the reserves adequate, are the number of rental units restricted, are airbnb's allowed, is the building's infrastructure maintained well, what is the balance on unpaid assessments, is it quiet, what's the history of special assessments (it would be a bear to have pulled money out of your Roth only to find that there are major plumbing issues and there is going to be a special assessment of $5,000)? How old is the roof, the heating and cooling? I might be wrong, but I seem to recall that the Illinois condo act only requires that there be an accounting of money each year, but does the HOA get an audit done even though not required by law? Are the board meetings open and can the current owner provide minutes to make sure the board doesn't do things in secret. In short, there are HOA's which are well run and there are those which are a mess.

When I sold my condo in Colorado and moved back east, I had 17 showings in less than two days and multiple offers. I sold it to someone who paid cash, waived an inspection and wanted a quick closing - even though his wasn't the highest offer. He could afford to take the risk. Its difficult in a hot market to make sound financial decisions. Whatever you do, be prudent.

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Re: Convince me not to raid my Roth to buy first condo

Post by Goal33 » Fri Sep 27, 2019 7:32 pm

Let’s say you’re definitely buying so the advice to not buy is not helpful. My advice would be to take a loan where you can put 10% down.
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Re: Convince me not to raid my Roth to buy first condo

Post by MotoTrojan » Fri Sep 27, 2019 7:50 pm

It would be better to completely empty your emergency fund and move an equivalent amount of your Roth to money market, forming a new emergency fund. If you never have an emergency before rebuilding the EF, you’ll have progressively reinvested the Roth and not lost valuable tax-free space. If an emergency does pop up, you can withdraw contributions tax-free and then you’re in no worse of a spot than using the Roth from the start.

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Re: Convince me not to raid my Roth to buy first condo

Post by averagedude » Fri Sep 27, 2019 7:55 pm

Do not raid a Roth account at age 33 years old. Taking this advice will result in your future self saying this to your present self.
1. Thank you for contributing to a Roth account when you were young.
2. Thanks for investing my Roth account in an investment vehicle that has compounded a high rate of return.
3. Thanks for not raiding my Roth account when you were young and letting it be there for me.

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Re: Convince me not to raid my Roth to buy first condo

Post by kokiagata » Fri Sep 27, 2019 8:49 pm

Can the condo you looking at get approved for FHA loan? I don't know specific rules in Chicago, but 32k sounds plenty for 3.5% down payment. I would avoid touching your retirement funds at all cost.

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Re: Convince me not to raid my Roth to buy first condo

Post by LadyGeek » Fri Sep 27, 2019 8:57 pm

Please don't raid your Roth. Here's why: Importance of saving early

Dollars not saved now will turn into several times those dollars lost when you get near retirement age.

IOW, the closer you get to retirement age, the more dollars you need to save to get to the same point you could have been at - had you not raided your Roth earlier in life.

It's also likely you won't have that kind of cash laying around later on.

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Re: Convince me not to raid my Roth to buy first condo

Post by sd323232 » Fri Sep 27, 2019 9:03 pm

Very bad idea, roth ira is protected even from bankruptcy. It's a safe haven for money to grow tax free. I would reccomend against using roth to buy condo.

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Re: Convince me not to raid my Roth to buy first condo

Post by Annabel Lee » Fri Sep 27, 2019 9:12 pm

Goal33 wrote:
Fri Sep 27, 2019 7:32 pm
Let’s say you’re definitely buying so the advice to not buy is not helpful. My advice would be to take a loan where you can put 10% down.
So I’m clear on this, it’s better to pay PMI for 5 years (in addition to a healthy PITI amount) as long as you avoid raiding the Roth?

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Re: Convince me not to raid my Roth to buy first condo

Post by Goal33 » Fri Sep 27, 2019 9:31 pm

Annabel Lee wrote:
Fri Sep 27, 2019 9:12 pm
Goal33 wrote:
Fri Sep 27, 2019 7:32 pm
Let’s say you’re definitely buying so the advice to not buy is not helpful. My advice would be to take a loan where you can put 10% down.
So I’m clear on this, it’s better to pay PMI for 5 years (in addition to a healthy PITI amount) as long as you avoid raiding the Roth?
I didn't say that. There are also options such as an 80/10. On 100k income he can pay down the 10% within a reasonable time period as well. But yes, I would rather not raid the Roth when he has other options.
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Re: Convince me not to raid my Roth to buy first condo

Post by MNGopher » Fri Sep 27, 2019 11:07 pm

Watch Rick's videos

https://www.bogleheads.org/wiki/Video:B ... le_.232.29

Tax free compounding interest over decades is....magical!
Especially when you are able to get started in a low tax bracket.

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Re: Convince me not to raid my Roth to buy first condo

Post by Jerry55 » Fri Sep 27, 2019 11:11 pm

wackeym wrote:
Fri Sep 27, 2019 4:21 pm
State IL (Chicago)

1) Am I ready to purchase a home yet?

2) Why shouldn't I raid my Roth to accomplish this goal?

3) Looking for recommendation on overall financial situation and what others would do in this situation.

Thanks!


It's YOUR Money....do what you feel is right. I live in a suburb just West of Chicago.
Property values aren't rising as fast as other places, but you'll always need a place to live.
Then again, if you get married...things may change, as well as your residential requirements.

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Re: Convince me not to raid my Roth to buy first condo

Post by averagedude » Fri Sep 27, 2019 11:13 pm

MNGopher wrote:
Fri Sep 27, 2019 11:07 pm
Watch Rick's videos

https://www.bogleheads.org/wiki/Video:B ... le_.232.29

Tax free compounding interest over decades is....magical!
Especially when you are able to get started in a low tax bracket.
I contribute my success today to my nerdiness of looking at compound interest tables when I was 20 years old. It truly is magical and real.

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Re: Convince me not to raid my Roth to buy first condo

Post by abuss368 » Fri Sep 27, 2019 11:27 pm

Once that tax advantaged space is given up one can never get that back.
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Re: Convince me not to raid my Roth to buy first condo

Post by abuss368 » Fri Sep 27, 2019 11:29 pm

Many years from now you will be happy you did not use Roth IRA money.
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Re: Convince me not to raid my Roth to buy first condo

Post by celia » Sat Sep 28, 2019 4:09 am

If there is any chance you might marry in the next 5 years, don’t buy any property now. A future spouse will want to have a “say” in where/ how they live and you would then likely sell it to find something agreeable to both of you. This would incur selling costs such that, in effect, you would get less money than what you put into it.

In my opinion, it seems you are not ready to buy any real estate. So keep renting while you save up a down payment.

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Re: Convince me not to raid my Roth to buy first condo

Post by GoldenFinch » Sat Sep 28, 2019 6:07 am

Your older self will thank your younger self when you look at your Roth balance :moneybag and realize it would have been much smaller if you had raided it to buy a condo. You will instead pat yourself on the back for making the wise decision to just rent a little longer and save up the 20% down payment. You will see all that tax free growth and say, “Wow! I don’t have to pay taxes on this money! Look how much is here! Compound interest in a Roth truly is the eighth wonder of the world! I must have been a genius back in my younger days to see what so many of my peers could not!”

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Re: Convince me not to raid my Roth to buy first condo

Post by JoeRetire » Sat Sep 28, 2019 6:31 am

wackeym wrote:
Fri Sep 27, 2019 4:21 pm
However I don't think I have enough cash on hand to purchase something I would be interested in.

1) Am I ready to purchase a home yet?

2) Why shouldn't I raid my Roth to accomplish this goal?

3) Looking for recommendation on overall financial situation and what others would do in this situation.
If you cannot afford a 20% down payment, then you are simply not ready to own a home yet.

Seek new roommates. Decide if you eventually want to own or not. If you do, then get more serious about it than you have in the past 10 years, and start saving enough for a 20% down payment.

You know in your heart that raiding your retirement fund is wrong. Otherwise, you wouldn't have posed this question. Convince yourself.
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Re: Convince me not to raid my Roth to buy first condo

Post by cdu7 » Sat Sep 28, 2019 6:40 am

This is a terrible idea, save up more cash until you have enough for a down payment. That Roth IRA space is the most valuable retirement space you have; don't give it up for a condo!

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Re: Convince me not to raid my Roth to buy first condo

Post by abuss368 » Sat Sep 28, 2019 6:41 am

GoldenFinch wrote:
Sat Sep 28, 2019 6:07 am
Your older self will thank your younger self when you look at your Roth balance :moneybag and realize it would have been much smaller if you had raided it to buy a condo. You will instead pat yourself on the back for making the wise decision to just rent a little longer and save up the 20% down payment. You will see all that tax free growth and say, “Wow! I don’t have to pay taxes on this money! Look how much is here! Compound interest in a Roth truly is the eighth wonder of the world! I must have been a genius back in my younger days to see what so many of my peers could not!”
Well said and I could not agree more.
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Re: Convince me not to raid my Roth to buy first condo

Post by Nate79 » Sat Sep 28, 2019 7:04 am

Its questions like this that show people are not ready to buy a house.

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Re: Convince me not to raid my Roth to buy first condo

Post by k3vb0t » Sat Sep 28, 2019 7:11 am

Will you raid the Roth again when you get hit with a big assessment from the condo association? Or if your appliances need replacing?

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Re: Convince me not to raid my Roth to buy first condo

Post by Cycle » Sat Sep 28, 2019 7:41 am

Wait till u have 20% down.

I have a co-worker who raided his 401k for this or that over the years. I remember him talking about a personal loan he took out to buy an ATV. He had very little savings and I'd hear him talk a lot about how he wants to retire but didn't have any savings. Still has a mortgage and a loan on a year old $50k truck. He was just fired for cause.

He's in his 60s with no job, limited skills, a mortgage, and practically no savings. Thank goodness for SS, but it wouldn't surprise me if his house goes into foreclosure and his toys get repossessed

He was one of the nicest guys in the office, but I think people can sometimes lose their filter as they get older, and that can get you fired.

Anyways, never raid a 401k or Roth. And be ready to retire early bc ageism is a thing.
Never look back unless you are planning to go that way

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Re: Convince me not to raid my Roth to buy first condo

Post by wackeym » Sat Sep 28, 2019 8:01 am

Wiggums wrote:
Fri Sep 27, 2019 5:58 pm
I would not raid your Roth account for the down payment.

This might be a good time to create a budget,if you don’t have one, and analyze your expenses.

Renting might be the best option. You’ll have more costs as a condo owner.
It probably is a good time to create a budget. Here is a rough swag at it:

Take Home Pay after 401(k) match, health insurance, maxed out HSA is roughly ~$4,600

Rent $1,000 (will likely be $1,600 next year)
Food $600
Entertainment $500
Phone $76
Utilities $75 (will increase next year)
Gas $50
Gym $75
Other $300

I typically can save around $1,000-$1,500 a month at my current clip so there is more stuff in here that is not listed. I am in the dating pool so that is where some of that entertainment/food spends goes. I typically go on a couple small trips every year but nothing extravagant. I also do a full Roth contribution every year so that eats up part of my monthly cashflow as well on January 1.

I am debating whether to go to school for my MBA as well (work in FP&A), but likely part time and in Chicago so that is another wrinkle. I have a disabled mother who i take care of and family around so I think I will be here a for a fair amount of time.

I started working at 25 and lately have seen upward increases in income (4 years ago I was only making 60k) so recently I have been able to increase my savings rate. It is just getting hard as friends are beginning to buy places and the "keeping up with the Jones" part of life is starting to creep in.

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Re: Convince me not to raid my Roth to buy first condo

Post by wackeym » Sat Sep 28, 2019 8:04 am

Goal33 wrote:
Fri Sep 27, 2019 9:31 pm
Annabel Lee wrote:
Fri Sep 27, 2019 9:12 pm
Goal33 wrote:
Fri Sep 27, 2019 7:32 pm
Let’s say you’re definitely buying so the advice to not buy is not helpful. My advice would be to take a loan where you can put 10% down.
So I’m clear on this, it’s better to pay PMI for 5 years (in addition to a healthy PITI amount) as long as you avoid raiding the Roth?
I didn't say that. There are also options such as an 80/10. On 100k income he can pay down the 10% within a reasonable time period as well. But yes, I would rather not raid the Roth when he has other options.
What is an 80/10 mortgage; I am new to the game when it comes to this stuff. I have always thought I would save 20% to not have to pay PMI, but if there are ways around it I may be interested to hear about them. I have yet to talk to a mortgage broker, as I know once I start looking it is going to be harder to say no.

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Re: Convince me not to raid my Roth to buy first condo

Post by wackeym » Sat Sep 28, 2019 8:06 am

celia wrote:
Sat Sep 28, 2019 4:09 am
If there is any chance you might marry in the next 5 years, don’t buy any property now. A future spouse will want to have a “say” in where/ how they live and you would then likely sell it to find something agreeable to both of you. This would incur selling costs such that, in effect, you would get less money than what you put into it.

In my opinion, it seems you are not ready to buy any real estate. So keep renting while you save up a down payment.
This is a very good point, the future Mrs. is sure to have better taste than I have and will likely not be wanting to live in the condo I find acceptable.

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Re: Convince me not to raid my Roth to buy first condo

Post by wackeym » Sat Sep 28, 2019 8:07 am

Thanks everyone for the kind advice!

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Re: Convince me not to raid my Roth to buy first condo

Post by bertilak » Sat Sep 28, 2019 8:23 am

celia wrote:
Sat Sep 28, 2019 4:09 am
In my opinion, it seems you are not ready to buy any real estate. So keep renting while you save up a down payment.
That is it. If you have to raid your Roth to buy then you are not ready to buy.

P.S. As many have said above, if not in so many words, a Roth is worth considerably more than the nominal dollar amount it contains.
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Re: Convince me not to raid my Roth to buy first condo

Post by Chadnudj » Sat Sep 28, 2019 8:28 am

wackeym wrote:
Sat Sep 28, 2019 8:01 am
I typically can save around $1,000-$1,500 a month at my current clip so there is more stuff in here that is not listed.
Okay, let's say you can save $1000 a month, and you have until next July, so roughly 10 months.

That's $10k, plus your $32k in cash, so you're at $42k.

That's more than enough to get 10-15% down on a mortgage for a 1bd condo in a nice part of Chicago (tons of neighborhoods that meet that criteria, too, which means you have a wide range of potential places and costs -- there are high rises near Lakeshore for $160k, and bigger places in Lincoln Park for $300k, and everything in-between or even above that).

Don't worry about PMI. People make it out like it's this huge mistake. It's not. If that's the cost to get into a place you like that you can completely afford with room to spare on your timeline, just do it.

Do think about where you want to live long-term. Huge condo boards can be a pain in the butt, so can small boards where one owner creates headaches. Check out the association's reserves/minutes carefully. Think about things like parking (for friends when they visit -- is there street parking nearby?), public transit accessibility, schools (it helps resale value), and how you'll feel about living there in 10 years (Wrigleyville in your 20s is great...in your 30s maybe...by your 40s it's a complete hassle you try to avoid unless you're going to a game).

EDIT: If you need a real estate broker/mortgage broker in Chicago, or want to bounce off ideas, PM me. I lived there for 12 years before recently moving to the southwest burbs.

Goal33
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Re: Convince me not to raid my Roth to buy first condo

Post by Goal33 » Sat Sep 28, 2019 11:00 am

wackeym wrote:
Sat Sep 28, 2019 8:04 am
Goal33 wrote:
Fri Sep 27, 2019 9:31 pm
Annabel Lee wrote:
Fri Sep 27, 2019 9:12 pm
Goal33 wrote:
Fri Sep 27, 2019 7:32 pm
Let’s say you’re definitely buying so the advice to not buy is not helpful. My advice would be to take a loan where you can put 10% down.
So I’m clear on this, it’s better to pay PMI for 5 years (in addition to a healthy PITI amount) as long as you avoid raiding the Roth?
I didn't say that. There are also options such as an 80/10. On 100k income he can pay down the 10% within a reasonable time period as well. But yes, I would rather not raid the Roth when he has other options.
What is an 80/10 mortgage; I am new to the game when it comes to this stuff. I have always thought I would save 20% to not have to pay PMI, but if there are ways around it I may be interested to hear about them. I have yet to talk to a mortgage broker, as I know once I start looking it is going to be harder to say no.
80/10 basically is 80% first loan, 10% second loan. The 10% will be at a higher rate since it’s 2nd priority in the case of foreclosure. The 80% will probably be .125% higher than if you didn’t do this. This is instead of a 90% loan where you’d have PMI (or no PMI but a higher rate). You’ll have to look at all options and see what makes sense. You can prioritize paying down the 10% loan.

Talk to a broker to understand. You don’t have to use the first one you talk to but you’ll want to understand your options.

Another option would be to use your cash, and a 50% of your 401k as a loan, and borrow 15k from another source if you have one. Take the 80% standard loan, and then do a HELOC to pay off your 15k other source, and 401k loan.

I see what everybody is saying about continuing to rent (which is what I am doing) but they don’t calculate the cost I am paying to move rather frequently (moving costs, damaged furniture, replacing furniture that doesn’t work with new places, BS deposit losses, double rent when I can’t time it perfectly, time off work, effort, random inspections).

Good luck!
A man with one watch always knows what time it is; a man with two watches is never sure.

JPM
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Re: Convince me not to raid my Roth to buy first condo

Post by JPM » Sat Sep 28, 2019 11:10 am

Dan Barnabic wrote a series of pieces on condo purchase evaluations for Marketwatch's Retirementors series in 2014-5. You can probably find some or all of them with a simple search. It has the basics of what to look for and what to look out for and financial considerations when purchasing a condo.

Buying property in the City now is perhaps more of a gamble than before. The city has to find money to keep the city running and improve conditions in the ragged parts of town while paying the pension contributions that were deferred in earlier years. The city is doing all it can to get the money from tourists and suburbanites, but it will probably have to get most of the money from owners of property in the city who enjoy good incomes. The low income people don't have the money and the out-of-towners can just avoid coming into the city. Some collar county homes have seen selling price estimate drops of 20-30% over the past 10 years. Your property value goes down but your taxes go up. So you see people moving over the state lines into Indiana and Wisconsin with commutes still reasonable or at least feasible. Not sure if price drops have begun to occur in the city proper or the north or western Cook County suburbs, though they have in the South Cook County suburbs. If you are committed to the city come what may, God bless you.

For young adults, the marriage market is in the city and adjacent north and western suburbs that are in easy reach of it. Suburban and exurban marriage markets for educated young adults are not promising. For the marrieds and married with children, the city is still great for the rich who can afford private schools or have the connections to get their kids placed in the good public schools. Everybody else has historically decamped for the suburbs, exurbs, or out of state.

JBTX
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Re: Convince me not to raid my Roth to buy first condo

Post by JBTX » Sat Sep 28, 2019 11:27 am

You're in Chicago, and this link is Miami, probably apples and oranges, but nonetheless....

http://adventuresincapitalism.com/2019/ ... -collapse/

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eye.surgeon
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Re: Convince me not to raid my Roth to buy first condo

Post by eye.surgeon » Sat Sep 28, 2019 4:35 pm

KlangFool wrote:
Fri Sep 27, 2019 4:59 pm
eye.surgeon wrote:
Fri Sep 27, 2019 4:35 pm
a Roth IRA allows $10k to be withdrawn penalty free as a down payment on your first home. IMO it's a perfectly reasonable use of that money. It is in fact one reason why I have helped fund my children's Roth IRA. I wouldn't recommend any other premature use of Roth funds but I think people need to relax a bit about use of Roth funds for a home down payment as there is an accommodation for it and it happens to be a very advantaged way to save $10k for a home.
eye.surgeon,

Roth IRA contribution can be withdrawn at any time for any reason without penalty. It is not limited to 10K.

KlangFool
I meant $10k in earnings.
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Re: Convince me not to raid my Roth to buy first condo

Post by LadyGeek » Sun Sep 29, 2019 6:38 am

This thread is now in the Personal Finance (Not Investing) forum (financing a condo).
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