Another form of "bridge financing" that is unknown to most is that a temporary IRA withdrawal, which if used properly, can be a virtually cost free means of raising cash for a down payment.

Did you know that funds can be withdrawn from an IRA for up to sixty days penalty free as long as it is replaced in the same or another qualified IRA account within the 60-day period?

This is a slightly more risky form of bridge financing because if the money can not be placed, it would be taxable and subject to the 10 percent penalty if the customer is under age 59-1/2. However, this is not an all or nothing transaction as the taxes and penalties would apply only to the amount of the initial withdrawal that was not replaced rather than the full amount in the event the customer was unable to repay only a portion of the amount.

A borrower can also tap their IRA penalty-free if the money is used to pay up to $10,000 of qualified acquisition costs for a principal residence of a first-time homebuyer.

***As you might expect, the usual disclaimers have to appear here such as advising your customer to seek the advice of their tax or investment professional before taking advantage of their IRA for funds to close.