ACTIVE REAL ESTATE FORECLOSURES FOR SALE IN BIRMINGHAM AL - 12/09/2011 PM VERSION

ACTIVE REAL ESTATE FORECLOSURES AND HOMES FOR SALE IN BIRMINGHAM AL.

With the much stricter loan qualification standards in effect today compared to times past, borrowers are often required to put down 3.5 - 20 percent of the purchase price to obtain a home loan. There are lots of people who would like to purchase a home in these times of low interest rates but can't come up with the down payment.

ACTIVE REAL ESTATE FORECLOSURES AND HOMES FOR SALE IN BIRMINGHAM AL

Fortunately, first-time homebuyers who have an IRA may have more money available for a down payment than they realize. Ordinarily, the money in an IRA can't be withdrawn before age 59.5 without incurring a 10 percent income tax penalty. For IRA purposes, you're a first-time homebuyer so long as you, or your spouse, did own a principal residence at any time during the previous two years.

ACTIVE REAL ESTATE FORECLOSURES AND HOMES FOR SALE IN BIRMINGHAM AL

However, there is a special exemption for first-time homebuyers. They can withdraw up to $10,000 in IRA funds to purchase a first home without paying the penalty. A married couple can each withdraw $10,000, giving a total of $20,000. Whenever money is withdrawn from a traditional IRA, it must be reported as income and regular income tax paid on it. This applies to withdrawals for buying a first home. However, this rule does not apply to Roth IRAs.

ACTIVE REAL ESTATE FORECLOSURES AND HOMES FOR SALE IN BIRMINGHAM AL

Roth IRAs are tax deferred. Unlike traditional IRAs, contributions to Roth IRAs are not tax deductible. Instead, withdrawals are tax free after age 59.5. So long as the Roth IRA has been in existence for at least five years, withdrawals up to $10,000 for a first-time home purchase are completely tax free However, if the Roth IRA is less than 5 years old, income taxes may have to be paid on the withdrawal, but no penalty tax.