UpsideDownEquity:
A cautionary note. An earlier post directed us to the chart at:
Image:Cshpi-peak.svg - Wikipedia, the free encyclopedia
I encourage you to look at it. Remembering that your current ownership in real estate created your current financial problem, I'd be questioning whether it makes sense to buy now, despite the convincing argument you are no doubt hearing from commissioned professionals who will only get paid if you buy.
If you look at history, you will find that bottoms are flat for an extended period of time (say 3 to 4 years or more). I question whether taking money out of your retirement account and placing your bets on real estate in this continuing declining market makes sense. This is a time in my life where I'm focused on increasing savings for retirement, not focused on taking on additional financial risk. I recognize that the key to my investment strategy is recognizing the need for principal preservation and not seeking unrealistic returns. Were I in your shoes, I would never place my retirement at risk based upon a perception that "now is the time to buy real estate." Remember those giving you that message are the same experts who said two years ago, "you'd better buy today or you'll be priced out of the market."
Daniel