Recent News and Articles on the Keywords: retirement + payment + down  Related to the article below (Last Update: 8/4/2008)

Is down-payment gift taxable income? Boston Globe, United States - ... she could use it as a down payment on her condominium unit. She gave me a promissory note. I took the money out of my retirement account (I am retired). ... Washington Post makes $2.7m loss guardian.co.uk, UK - Deteriorating conditions in the company's newspaper division and substantial early-retirement payments made more than 340 staff at the Washington Post, ...WPO Borrowing from your 401(k)? Do the math first Newsday, NY - She and her husband borrowed from her 401(k) to make a down payment on their first home in 1993. She wishes they hadn't. "We paid the loan back in about a ... When 401(k) Investing Goes Bad Wall Street Journal - Aug 3, 2008 Only 21% of full-time employees had an old-fashioned pension plan in 2007, down from 54% in 2004, according to Transamerica Center for Retirement Studies, ... Danish economic problems grow with bailout of regional bank World Socialist Web Site, MI - With the housing market now in freefall, the bank faces severe trouble with the prospect of payment defaults on its loans. The announcement that the central ... Central European Distribution Corporation Announces Second Quarter ... istockAnalyst.com, OR - C. Represents the net after tax impact associated with the early retirement of 20% of CEDC's outstanding Senior Secured Notes, including an 8% one-time ...CEDC - PINK:BLCY Boost for loan guarantee scheme disguises the reality of its decline Telegraph.co.uk, United Kingdom - It meant that the Government had to pay out almost ?70m on 1759 loans last year - an average payment of just under ?40000. The scheme, by its nature, ... Los Angeles Times Should you buy a home now? Los Angeles Times, CA - Aug 3, 2008 But renters can take the money they would have spent on a down payment and invest it in stocks, mutual funds or other investments (20% down on the ... Don't let the policy fine print trip you up Personal Finance, South Africa - Aug 3, 2008 Age limit: Benefits are usually paid only until normal retirement age or the age of 70. The conditions differ from assurer to assurer. ... A Look Back At The Week's Top Stories: Tulsa to gain Boeing 777 work TMCnet - Aug 3, 2008 Among the provisions of the early-retirement incentive are a severance payment of $15000, medical and flying benefits, union and company officials said. ...

Retirement fund vs. house down payment

Dear Debt Adviser,
My husband and I have never had anything: no mortgage, credit cards or car payments. We have never been able to save and have bad credit. Question is we have a retirement plan with $16,000 in it. Should we borrow $10,000 or so for a down payment on a house, with the hope that our bank may give us a loan for a house? My husband is 49 and plans on working until 70 or so. I'm 47 and not able to work right now for health reasons.
Dyan

Dear Dyan,
It sounds as though you and your husband are "cash only" people (up north, where I come from, this is a proud tradition and we even have a group we affectionately refer to as "swamp Yankees" who embody this conservative spirit)! Still, I'm surprised that you both are in your late 40s and have never owned a home, had a car payment or credit cards, and yet still have bad credit. There is more here than meets the eye!

I am going to guess that if we could have a conversation, it would tell a tale of one unfortunate event after another culminating in health problems for you. However, be that as it may, I understand the desire to own your own home and feel the security that goes along with it. So let's get started!

Before taking the housing plunge, I recommend that you both discuss and agree on your goals. One goal is to retire at 70. To do that you will need to save a certain amount. Can you do that and raid the retirement plan at the same time? Next, what about the bad credit you say you have? Generally, this indicates past instability or challenges. Are these likely to continue or have you both turned a corner in your lives?

If you are not financially stable, a house purchase could paint you into a corner with additional and unexpected expenses and rising real estate taxes. Also, if you currently have delinquent balances on any bills, you will want to bring them to a current status before you make any other financial decisions.

Two other things that you said concern me. One, you state you have $16,000 in retirement savings. For your and your husband's ages, that is not nearly the amount you would want to have saved at this point. Two, I know you say that your husband plans to work until he is 70, but, can you count on that? You are not working due to health reasons; the same could happen to your husband somewhere between 49 and 70. Our best-laid plans are often interrupted. In fact, the Employee Benefit Research Institute's 2004 Retirement Confidence Survey reports that 37 percent of retirees left the workforce earlier than they had planned.

Due to these concerns, I am worried about you taking any money out of the small retirement savings you do have to use as a down payment on a home. A better option would be to use the old-fashioned approach and save for a down payment. I know you don't have a great track record for saving, but maybe with a specific goal in mind (down payment for a house) you will find it easier going.

Another positive aspect of saving for the down payment as opposed to withdrawing from retirement savings is that it will take some time to accomplish, thereby giving you time to improve your credit history (by paying off balances and making payments on time) which may result in better mortgage terms.

One last thing, because you state you have bad credit, I am assuming that you have recently checked your credit reports with each of the three bureaus. However, if you are guessing about having bad credit, I suggest that you get copies of your credit reports so you will know exactly where you stand.