When obtaining a home loan, you’ll receive two important documents from your lender: a loan estimate and a closing disclosure. On the surface, these documents are very similar, but they both serve different purposes. Here’s what you need to know about the differences between these two forms and what each means for you:
What Are Liquid Assets?
You have found yourself unable to pay your Kansas City home loan or need extra money for an unforeseen medical emergency. If you have liquid assets available, they can be quickly turned into extra funds should you need them in a hurry.
What Items Are Considered Liquid Assets?
A liquid asset is an item of value that you own that can be converted into cash should the need arise. Liquid assets can include:
- Funds in a savings account
When converted into cash, these items will retain their value. Remember, just because an item can be turned into cash does not make it a liquid asset. Some examples of non-liquid assets are:
The reason these particular items are not considered liquid assets is because it often takes time to find a buyer for them. Even if a buyer is quickly found, it will take time to get the item appraised and sold. There is also the possibility that when sold, they will not be sold at their actual value.
How Are Liquid Assets & Home Loans Connected?
If you are liquid asset poor, you run the risk of falling into debt or becoming behind on your Kansas City home loan payments should you find yourself scrapped for cash. If there is no “slack” in your budget, then you will have a difficult time making payments for your Kansas City home loan and other bills.
Lenders want you to be able repay your loans. When you apply for a Kansas City home loan, the availability of liquid assets is a key component that assures lenders that you will be able to pay it off. Should you lose your job or run into financial trouble, having enough liquid assets available will keep you afloat until you can get back on your feet.