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Since we're discussing Dave Ramsey, another financial ?

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I bought my house on a contract for deed. I'm about to get a large settlement from my divorce. This money is from ex's retirement account. I'm wondering if I should use a portion to pay down my house. I know there will be penalties and taxes for any amount of this money I cash out, but I've heard (haven't confirmed) that I can get out of paying fees and taxes if I reinvest the money in a home. I'm going to have to cash out some of the money because I need a vehicle, badly. No other way around that.


Any advice?

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Any advice?


The first question to get answered is if you would qualify for that clause. I believe that is only true for your first time home buyers. If you were on a loan with your x or have owned before I don't think you would qualify, but I am not tax professional.


If you don't qualify then you are looking at a 40% tax. You would probably be better off borrowing against your IRA to pay off the house, because you have to pay yourself interest, so you actually come out ahead. But even that would be dependent on your contract and how much you will save by doing this. If you aren't going to save that much then you don't want to put the money at risk, especially when we could be heading into a recession (and we know the housing market already is in one).


My 2 cents.



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