Investor · Raleigh, NC · Member since 2013 · 1k+ posts · 708 votes
I can't seem to find any posts answering this question (although it probably has been asked before): when lenders require a 6 month reserve does that typically mean cash/savings account/CD or will they accept liquid securities like mutual funds, stocks, etc? Or does this vary from lender to lender and based on individual circumstances?
If you mean for getting a loan, then anything is fair game. Just provide brokerage statements.
If you mean for your own money you have on hand for a big bill, securities have a significant downside. If they drop in value and you need the cash you may be forced to sell at a price you don't like.
I've been told that qualified plans are discounted. 40% was the number I was given, don't know if that's universal. That's to account for taxes and penalties if you have to take the money.
Yeah, I've heard the same before as well. My lender didn't get into specifics, but all I had to do was show them one statement and I was good to go. Granted, I only had to cover reserves for two properties, so my 401k could easily do that, even with the discount.
YMMV between lenders. I've used the 401k twice now with two different lenders. No muss, no fuss, so it seems to be universally accepted. Sure does make it a lot easier to come up with reserves...
@Jay Dao .." YMMV between lenders. I've used the 401k twice now with two different lenders. No muss, no fuss, so it seems to be universally accepted. Sure does make it a lot easier to come up with reserves..."
That's exactly what I was hoping to hear..... thanks!