What Is A Proof Of Funds Letter?
Proof of Funds may be needed to confirm you have the ability to perform as you’ve stated. Proof of Funds is a document that demonstrates how much money you have available for your real estate transaction. When purchasing a home, you may need Proof of Funds to show the seller that you can cover the purchase costs of a home.
Proof Funds may be needed for the following situations:
- All Cash Purchases
- Down Payment Confirmation
- Additional Upgrades for NEw Construction
- and other unique circumstances
What Qualifies as Proof Of Funds?
In some transactions, simply having a bank statement from your bank or printed online can qualify. Additionally, a certified financial statement or copy of a money market account balance will qualify. Other times, you will need a letter from your bank or financial institution that states the exact amount of accessible or liquid funds that you have available. Bank statements are the most common document to use as POF and can typically be found online or at a bank branch.
What are liquid funds?
It’s important to note that your funds must be liquid. This means that mutual funds, life insurance, another person’s bank account, shares and bonds or proof of other possessions do not qualify as Proof of Funds.
How Is A Proof Funds Letters different From A Preapproval Letter?
Preapproval letter is a document stating that a lender will provide a buyer with a loan, whereas Proof Of Funds letter states that a buyer has funds available to pay for costs associated with the purchase of a home.
Proof Of Funds Requested By Seller
Sellers will ask for Proof Of Funds in addition to a preapproval when they want to see evidence that a buyer can cover the closing costs and down payment. They may also require Proof Of Funds even if a bank or lender does not require it to approve you for a mortgage.