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House purchase in ER
Old 03-12-2013, 08:49 AM   #1
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House purchase in ER

I am retired and age 57 and want to buy another home near the coast. I own my current home and have a good sum of cash but not enough to purchase home without selling current home first. I got a lump sum for my pension and it is in an IRA with Vanguard. I also have some other cash stock investments as well as other IRA monies and a 401K. The 401K could be withdrawn without the 10% penalty but would be taxed. What I am trying to figure out is how I can buy another home without first selling the house. Without income would I still be able to secure a loan for some of the house. If not what other scenarios may be possible without a huge tax implication?
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Old 03-12-2013, 09:54 AM   #2
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Maybe secure a Home Equity Line of Credit (HLOC) on your current house to provide the bridge funds you need. This assumes you would then sell the older house and pay off the HLOC. Though it isn't clear to me if that is your intention.
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Old 03-12-2013, 10:07 AM   #3
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Thanks for some input mpeirce! I do intend to sell the other home. Any idea what kind of rates are out there for a HLOC? I guess another starting point for me would be to see if I can find a mortgage lender that might entertain my loan? Or is that not worth the effort?
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Old 03-12-2013, 10:16 AM   #4
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Quote:
Originally Posted by afntrn56 View Post
I guess another starting point for me would be to see if I can find a mortgage lender that might entertain my loan? Or is that not worth the effort?
People retire to different locations all the time, and they can't all be cash sales. It can't hurt to talk to a mortgage broker and ask some questions.

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Old 03-12-2013, 12:44 PM   #5
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We are planning to downsize shortly, and will need to sell the existing shanty first. Since we are contemplating a smaller home in a 55+ community, I assume it will be necessary to put some $s down to start that construction while our house is on the market, so I'm in the same boat as you with limited after tax $s for a down payment or progress type payments. Need to go see Wells Fargo in the next few weeks regarding a heloc or possibly a bridge loan.
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Old 03-12-2013, 10:40 PM   #6
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There have been a few threads. IIRC regular automatic IRA/401k withdrawals and taxable dividends would count as income. In addition to SS and pensions/annuities and more normal income. Trying to convince them that you have $4M in equities to payback their little $100k loan doesn't seem to work as easily.
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Old 03-12-2013, 11:23 PM   #7
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My advice FWIW, NEVER EVER buy another house until you have sold your current house unless you can afford it. Can you afford the mortgage on your new home if you don't sell in 3, 6 12 months or longer. What if your house fetches far less that you anticipated, and there is a un-budgeted shortfall
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