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Personal Finances / Buying or Selling a Home


Subject:  Re: When can I qualify for a loan? Date:  4/27/2013  12:49 PM
Author:  EvanED Number:  125186 of 128233


If you take money from an IRA and redeposit it in an IRA within 60 days, that's a rollover.

That's what I meant by "essentially borrow". I brought that up in the context of the "fairly big ticket" repair item, like a furnace. I would have to withdraw the money for the repair, but during that 60-day span I would likely earn enough (especially if I especially tried to be frugal) to be able to redeposit it in full. (My estimate of how much I could afford to do this and still make it back in time to recontribute is either $8K or $13K depending on when it happens.)

Yes, I know the IRS would call that a rollover. Yes, I know it's limited to 60 days. Maybe you disagree with me saying "borrow" before. But to me, it walks and quacks like borrowing -- I take money out, use it, and a little bit later put it back. (Perhaps in a separate account.)

IRAs are retirement accounts, not piggy banks to be raided when you can't live without a Twinkie and have to run down the alley to Paul's Grocery to get a package.

Yes, I definitely get that's the idea. However, what I would say is that in my case the situation is a little bit complicated. It's complicated because as a grad student I haven't really had the opportunity to build both an actual emergency fund and a retirement account. I really wanted to contribute to some retirement account (esp. because I guessed that the time I opened it was a good time to get into the stock market, and it was), but I couldn't have done so for a couple additional years if I built up an explicit emergency fund. I chose the Roth specifically because you can withdraw your contributions without penalty -- that was my backup in case something went horribly awry. (And to be clear, I've never had to tap it.)

Because of that, the Roth to me currently serves a dual role -- it is both a retirement account and emergency fund. It's not really a matter of "don't treat your Roth as an e fund" because that ignores the above reality. The question really is: At some point in the future this will change, and it will become a "pure" retirement account -- when will this happen? My argument is it's not totally unreasonable to say "a few months after I buy a house".

You seem to be arguing that building an efund and switching the Roth over to "pure retirement account" should come before the house. That's fine, and I'll definitely consider it. But does my explanation make things a bit more clear as to how I'm thinking about the situation, even if you disagree? (Perhaps it was already clear and I didn't write anything you hadn't already picked up.)


However, if you see opportunities in the home to re-purpose a den to a third bedroom by adding a closet, or put up a non bearing wall in a large room to section off a third bedroom, then you will add significant value to your two bedr