What are liquid assets?

[DPlatypus]

I'm filling out a little questionaire to find out how expensive a mortgage I can afford and it wants to know what my "liquid assets" are?

 

[Howard]

Cash, savings, bonds, stocks?

 

[Ns1]

assets that are easily convertable to cash

 

[spidey07]

Originally posted by: NeuroSynapsis
assets that are easily convertable to cash

 

[beatmix01]

water you can pour on you a$$

 

[GasX]

It depends...

If you are a mortgage lender, it's all of your cash, stocks, bonds, even IRAs and 401k's.

This is a ridiculous way of calculating as anyone who treats an IRA as liquid is asking for trouble. A mortgage lender does it to factor it into whether or not you could pony up for mortgage payments if you lost your job for a while.

Any sort of financial advisor will tell you that your liquid assets are anything you can convert to cash in 30 days without losing money. Withdrawal penalties and fees take IRAs, 401Ks and by many people's measure's stocks too. By this definition, you add up your checking and savings accounts, CDs, and any other cashlike instruments...

 

[DPlatypus]

Thank you 🙂

 

[Lovepig]

so... it's NOT # of kegs not tapped??

 

[EMPshockwave82]

assests that are considered highly liquid are things that can be easily converted into cash

 

[FrustratedUser]

My liquid assets are:

A case of beer.
1 bottle of gin.
1/2 bottle of Tequila

 

[Francodman]

Doug,

Can i please have my calculator back.

kthx

 

[Vic]

Originally posted by: Mwilding
It depends...

If you are a mortgage lender, it's all of your cash, stocks, bonds, even IRAs and 401k's.

This is a ridiculous way of calculating as anyone who treats an IRA as liquid is asking for trouble. A mortgage lender does it to factor it into whether or not you could pony up for mortgage payments if you lost your job for a while.

Any sort of financial advisor will tell you that your liquid assets are anything you can convert to cash in 30 days without losing money. Withdrawal penalties and fees take IRAs, 401Ks and by many people's measure's stocks too. By this definition, you add up your checking and savings accounts, CDs, and any other cashlike instruments...

We already discussed this 🙂

Mortgage lenders only count 70% of the vested balances of 401k's and IRA's. They are liquid assets and can be easily converted into cash in less than 30 days, you just have to pay the penalties, hence why they only count 70%.

And the reason mortgage lenders count this is because anyone facing possible default would (or should) cash out their IRA or 401k in order to avoid foreclosure if that was their last resort. That a prospective borrower has that potential last resort is definitely a bonus to approval too (as opposed to someone who does not).

btw, non-liquid retirement funds, like pensions, annuities, and PERS are not counted that way even if vested.