Your eligibility to draw money from your IRA without paying tax penalties does have a few stipulations.

1. You can only use up to $10,000.
2. You have to be a first-time homebuyer, which to the IRS means you have not owned a home in the last two years.
3. You have to use the money for the down payment within 6 months of withdrawing it.
4. You can only do it once in your lifetime.

If you are not a first time home buyer you can still withdraw from your IRA for your home purchase, but keep in mind, you will be taxed on early disbursements. The IRS will tax you heavily – 10% – on early disbursements and you will have to pay taxes on any investment gains your IRA has made.  Additionally, the money you withdraw will be considered taxable income next April 15^th.

It is always a good idea to work with the board of your Home Owners’ Association and make them aware of any issues that may arise with a neighbor. The bylaws of many HOAs include procedures for dealing with homeowners who break the rules. Two of the most common complaints that are brought to HOA boards are those regarding noise issues and unpaid HOA dues.

Unpaid HOA dues can be a serious affair that will disrupt your entire community. In the case of unpaid dues, the HOA may have the option to put a lien against the troublemaker’s house – meaning that those outstanding fees will have to be paid when the house is sold or refinanced.

Noise violations may carry other recourse from your HOA. These recourse actions will be listed in the HOA bylaw package that was given to you upon possession of your home. If you do not have a document containing these bylaws you can ask the board of your HOA for a copy of the bylaw document.

If you can’t get the help you need from your HOA, then make sure you document the steps you take to address the issue on your own and keep your HOA informed of those steps. If you have to call the police for a noise issue, take notes. Or, you might send a letter asking the neighbor to reform his/her behavior by certified mail – and keep a copy for your records.

Remember, you probably never want the issue to go to court, work with an attorney to insure you are following the law. Homeowner Association laws vary from state to state, and this is a complicated issue that may call for professional legal advice. Your HOA may also already have an attorney who is familiar with the HOA bylaws and could have a wealth of advice on the situation.

The first thing you need to do when financial difficulty strikes is call your lender. Far too many people wait too long to contact their lender about financial trouble. It is very important to try and establish a solution that your lender will agree to early on.

There are several possibilities that your lender may consider. Two common options used to avoid foreclosure are forbearance or loan modification.

Forbearance is an agreement established by the lender and the mortgage holder to allow for reduced payments for a set period of time. You may have to agree to pay a lump sum in the future to make up for lost payments but usually the lender will tack the extra outstanding on to the end of the loan.

Your lender may also be willing to modify the terms of the loan, such as extending the number of years you have to repay in order to make the monthly payments more manageable. However, keep in mind, more than 1.25 million homeowners applied for loan modification under the Obama ‘Making Home Affordable’ program but only about 350,000 ever had their loans reduced.

You can discuss these options and others with an HUD-approved counselor. A state-by-state list of counselors is available at www.HUD.gov

Beyond assistance from your lender, you may need to find additional work or rent out a room in your house to supplement your income.

Or, if you feel you just can’t cut it, call your Realtor and discuss selling the property. Depending on the equity you hold in the home you may be able sell and buy another smaller home with lower mortgage payments.

The first thing to consider when refinancing is that is going to cost you money to refinance your mortgage. These costs could run you from several hundred to several thousand dollars depending on agreements you have with your current lender.

It may be possible to add these fees to the refinanced loan amount. However, if you have the money to spend, it might make more sense to just pay off your credit card debt, which is likely at a much higher interest rate. If you don’t have the money to pay the refinancing fees up front, and you end up folding that amount into the loan, just remember that your monthly payment won’t drop as significantly.

There are two rules of thumb when it comes to refinancing:

1. Only refinance your mortgage if you can drop your interest rate by at least one full percentage point.
2. Refinance your mortgage only if you’re planning on staying in the house for at least a few more years.

Remember, always consult with your lender, take a good look at what sort of refinancing options they may be able to provide and keep a close eye on those refinancing fees.

With discipline and focus you can repair your credit rating enough to buy your own home. The first step to recovery is to request a copy of your current credit report and review it carefully. If there are any errors in your credit report inform the credit bureau and go about rectifying the errors. Once you have reviewed you current credit report, begin assessing the current debts you hold and how you can begin to pay down those debts. Keep your current debt payments up to date and don’t’ take on additional credit without careful consideration. Depending on the scale of debt you currently hold always keep in mind that paying down debt takes time, diligence, focus and a plan of action.

Negative credit can appear on your credit history for up to 7 years but building positive credit history can begin now. Creditors look at the longevity of your credit history and prefer to see long established relationships with lenders. Don’t rush to close those accounts – a credit card with a high limit but which you only use a little bit and pay regularly will improve your score.

If your goal is to buy a home in the short-term, there is another option. You may want to look into a lease-to–own arrangement.

Here’s an example:

Perhaps you are currently renting a home and the landlord has agreed to apply a percentage of your rent towards a down payment. Currently, your monthly rent is $1000 dollars and the landlord is applying 25% of that towards the purchase. In this type of arrangement you would have saved $3000 a year towards the down payment of the home you currently rent. When it comes time to purchase the home any of the money amassed is applied to the down payment on the purchase of the home.

Seems like an ideal situation if you have a landlord who is willing to enter in to such an agreement. However, there are some downsides when entering into a lease-to-own arrangement.

If at any point you decide not to purchase the home any money saved will be lost. In addition, do not overlook that those monthly set-asides will only apply to your down payment on the property. You will still need to qualify for your own mortgage. Between now and when you want to buy the home you will need to continue with a plan to recover your credit rating.

Keep in mind; paying down your debt takes time, diligence, focus and a plan of action. Sticking to that plan will help you pay down that debt faster and put you on the path to being a proud home owner.

Ralph, there’s a few things you need to consider:

• You’ll need to get caught up on your payments before you refinance
• There are costs associated to refinancing — you’ll have to get the property reappraised, and pay another round of closing costs.
• Being behind on your payments is serious… Call your lender immediately. Anytime you fall behind on payments, you need to call your lender and explain the situation.

And, there are options available that probably make more sense than refinancing:

• Forbearance, an agreement you reach with your lender, means you’ll stop making your payments or will make smaller payments for a set amount of time
• When that time is over, you’ll have to pay extra to make up for it
• Alternatively, you can make a repayment plan with your lender, to catch up with the past-due amounts on schedule.

Hope that helps!

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Yes, John, that’s exactly right:

• You can pay off any loan more quickly, which saves interest payments
• If you’ve been making bigger payments than your mortgage requires, there’s no problem with cutting back on those payments if you need to – as long as you’re still making the minimum monthly payment.
• The downside of a 30-year loan is a higher interest rate (one quarter or one-half of a percent, usually). So, if you pay off a 30-year mortgage in 15 years, you’re still paying more in interest than you would have with a 15-year mortgage – but you’ll also have the security of knowing you can drop your payments down significantly if you need to without defaulting on your loan.
• Paying off a long-term loan more quickly also means you’re building more equity
• But remember to build your savings as well as your equity – in an emergency, you have more to think about than just mortgage payments. There’s a balance between building up savings and paying down debt.

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Answer:
Yes, manufactured and modular housing are both covered by the first time home buyer tax credit, as long as they are being used as a primary residence. According to the IRS, you can even use the credit on a manufactured home if you’re renting the land it sits on.

Again, the credit is for 10% of the purchase price, up to $8000. So if you buy a manufactured home for less than $80,000 — you’ll only be able to claim 10% of that. For example, if the home costs you $65,000 you’re only going to be able to claim $6500 for the tax credit.

However, in your case, you won’t be able to claim the credit at all, because you didn’t actually buy the house. Since you received it as part of a settlement and didn’t pay any money for the house, you don’t get to take the credit.

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Answer: First, let’s look at the money. Can you comfortably afford to re-do your bathrooms and kitchen? That should be your starting point. This isn’t the time to be pulling out equity from your home if you can avoid it…but if you have the cash saved up, then it might be something to consider.

Remember, that if you invest in your home with upgrades like we’re talking about, you might get your money back when you sell, but you might not. There’s no guarantee that a $25,000 renovation will bring you $25K more at the settlement table. Would you be happy with recouping just a percentage of that?

Second, let’s look at the market in your area. One thing you might do is visit as many open houses as possible in your area, and see whether your ‘competition’ have new bathrooms and kitchens. If they all do, and you don’t, you might be at a competitive disadvantage when it comes time to sell. However, if most of the nearby homes have ‘vintage’ baths and kitchens, it might not be a big issue.

You might also talk to a REALTOR® and get their opinion on this — they’ll know whether those upgrades are essential, or not. Remember, though, it’s still a buyer’s market, so anything a seller can do to make their home ‘shine’ is worthwhile… the competition is fierce!

And last, let’s talk about you. Would you like a new kitchen and bathroom? Would those things make you happy? If so, do it! Enjoy your home. Especially if you’re going to be staying a few years.

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If you’re looking at refinancing, you can start with your existing lender, but you’re also free to contact other mortgage companies to see if they’re able to cut you a better deal! You’ll have to look at refinancing closely, as there will be costs involved, new closing costs, attorney fees, an appraisal and so on.

But, in the long run it might be well worth it!

On the other hand, if you’re having a tough time financially, or if you’re underwater on your loan, you’ll want to look into loan modification. This may be tough, as many lenders are dragging their feet when it comes to mortgage modifications. Plus, with loan modification, the only lender you’ll be talking with is the one that currently holds your mortgage. In most cases, the only way they’ll even consider a modification is if you can prove financial hardship.

That being said, they might not say “no” either, as they don’t want to lose you as a good customer. The first thing to do is contact your lender and ask them directly if there is a way to modify your mortgage and what their process is to go about it.

Also, check out the government’s web site. ‘Making Home Affordable.’ [link] They have lots of information about loan modifications, and refinancing, aimed at helping you stay in your home!