There are even more options for purchasing homes! I was at lunch last week with two agents who were really excited about a new program they wanted me to “brush up on.” They said you could take your “Self Directed IRA” and purchase real estate with it! WOW! They have clients they are talking to about putting part of the purchase of the property in an IRA and then getting a mortgage on the other part.
“What type of product do you recommend for this mortgage?” Well – honestly – I don’t recommend doing this, unless you are working with a hard money lender – and my honest belief is that the rates on the hard money loan is going to completely wipe out any benefit of holding the property tax free in the IRA.
The agents continued to protest, and said that they had been told you could PLEDGE your IRA and you didn’t have to cash in your stock! At this point I figured they were sitting over there in the boomer bus. (I mean you have to PAY for the real estate some how!)
I asked them for more information and they gave me a fax they’d received from Kelli L. Click with Sterling Trust Co in Waco, Texas. I called Sterling, and confirmed that they need liquid funds in the IRA. I also spoke with 3 other financial planners here who said they felt certain you were at the very least asking for an audit from the IRS – because they don’t like these kinds of programs. Has anyone else had any experience with these???