As a homebuyer, you’ll need to provide several documents to the lender you choose to obtain a mortgage from. But are you aware that you also need to provide a proof of funds (POF) letter to the seller? This will essentially ensure them that you have enough money available to purchase the property. So what is a POF letter and why is it important? Here is everything you need to know about POF letters:
What Is A Proof Of Funds Letter?
A POF letter is a document that shows how much money a person or entity owns in their bank account. When purchasing a home, it’s essential to produce a POF to the seller to confirm that you have money available to cover all costs related to the home sale.
Why Do You Need A POF Letter To Buy A Home?
A POF letter ensures the seller that you have sufficient money to buy the home or make the down payment. You will need to submit a POF letter when you purchase a home in cash. Sometimes, a POF letter will be required by the lender to see how much money you have to cover the remaining costs associated with the home.
How To Get A Proof Of Funds Letter
It’s easy to obtain proof of funds for real estate from the bank. Visit the bank and reach out to an official who’ll put the bank statement in online form so it can be submitted as a POF letter. If you have several bank accounts, you will need to move your money to a single account to get the POF letter. Make sure that your POF letter is up-to-date with the correct personal details and contact number.
As your POF letter holds sensitive information, do not provide it to anyone who isn’t involved in executing the home sale.
What Are The Funds That Qualify As Proof Of Funds?
Funds that are available in your bank account generally qualify as POF. You can just get the bank statement or a copy of the balance amount to submit as POF. You must remember that your POF should be liquid, meaning an asset that can be quickly transferred into cash. Mutual funds, insurance, shares, bonds, and other possessions don’t qualify as proof of funds.
What Information Should A Proof Of Funds Letter Have?
A POF letter must include the following:
- Balance of total funds
- Your bank’s name and address
- Bank official’s signature
- Bank statement
What Is The Difference Between A Pre-Approval Letter And A POF Letter?
A pre-approval letter is a document issued by the bank that states you’re prequalified for the mortgage. It will contain information regarding how much you’ve qualified for, and this amount will be based on your credit score, debts, and assets. On the other hand, a POF letter is a document that states how much money you have available in your bank account to purchase a home.
If you’re looking for quick funds that you can use to double close a real estate deal, reach out to our team for immediate approval. We don’t have upfront fees, credit checks, or income requirements. It’s quick and simple. Contact us today!