An owner's financial statement can be constructed very simply with a list of assets and liabilities.
Assets
- Real Estate
- Stocks, bonds, mutual funds
- Bank accounts
- Personal property
- Retirement accounts
Liabilities
- Real estate loan(s)
- Personal loans
- Credit card debt
- IRS liens
- Judgments
- Lawsuits
Lenders will want the amount of all the monthly expenses in addition to the assets and liabilities. These would include:
- Credit card bills
- Utility bills
- Car payments
- Insurance costs
- food and clothing
- Medical bills
- Child support
- Tuition expenses
Supporting Financial Information
These items are typically the same required by a borrower when applying for a loan. The lender will let you know how far back (2 months, 3 months, 12 months) the seller needs to go in supplying this information.
- Pay stubs: Pay stubs allow the lender to see if the monthly take-home pay would cover the loan payments plus all the other monthly expenses. If the owner is unemployed, there will be no pay stubs to include.
- W-2's and / or tax returns: The lender is trying to get a complete picture of the owner's financial situation. Is the income going up? Is the income going down? Will the borrower be able to make payments if the lender agrees to a repayment program?
- Bank statements and credit reports: Again, the lender wants to be sure the borrower is truly unable to make the payments and these support that. The bank will order a credit report on the borrower but if they have oe available attaching it is a benefit.
