A borrower's 401(k) statement shows a current balance of $100,000. For reserve calculation purposes, what percentage of this balance can typically be counted as liquid assets?
Correct Answer
D) 60% of the vested balance
Retirement accounts like 401(k)s are typically counted at 60% of the vested balance for reserve purposes. This discount accounts for potential taxes and penalties associated with early withdrawal, making it a more conservative estimate of accessible funds.
Why This Is the Correct Answer
Retirement accounts like 401(k)s are typically counted at 60% of the vested balance for reserve purposes. This discount accounts for potential taxes and penalties associated with early withdrawal, making it a more conservative estimate of accessible funds.
More Origination Questions
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For a construction-to-permanent loan, when must the initial Closing Disclosure be provided for the construction phase?
During a refinance transaction, the appraiser determines that significant unpermitted additions were made to the property. The appraiser wants to discuss this with the MLO before finalizing the report. What should the MLO do?
An appraiser discovers that a property has significant foundation issues that were not disclosed. The appraiser reduces the property value by $25,000 and includes detailed comments about the structural problems. The loan officer is upset because this will kill the deal. Under AIR, the loan officer:
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A borrower wants to finance $150,000 to renovate their existing home valued at $300,000. They have $50,000 in equity. What type of loan would be most appropriate?
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