Proof of funds letter is something that a home buyer needs. Regardless of how much money you have, you will need to provide a few documents in order to actually purchase a home. One of these includes proof of funds letter for any type of home buyer — even if they have enough money in cash to cover the purchase. 

Generally, buyers need to get a proof of funds letter in order to make an offer on a home so if you do not have one, you are most likely not prepared for the purchase. 

What Does a Proof of Funds in Real Estate Mean? 

Most home buyers get their proof of funds from a bank, but there are other ways to verify your liquid assets. Open credit lines, money market accounts, and other investments where your money can be withdrawn quickly can all be used in a proof of funds letter. 

If you need to transfer money for your down payment, have the money in one place before you make an offer. If you are using a variety of accounts, consolidate the money to make sure that the home buying process is a smooth one.  

How Can I Get a Proof of Funds Letter? 

A proof of funds letter includes information needed to complete an offer on your new home. 

A proof of funds letter includes:

  • The account holder’s name
  • The current balance of available funds
  • Bank letterhead 
  • Signed by a banking official

In some cases, a recent bank statement from your checking and savings account or other accounts where you keep the money is all you need. In addition to that, you may also include a short letter of your own to create a proof of funds.

Other Proof of Funds Real Estate Documents

In addition to a proof of funds letter, you need to obtain a pre-approval from a mortgage lender. If you plan to purchase a home, the proof of funds letter is a document that shows where you have the deposit money, However, it is not the only real estate document you need. If you do not have enough cash to purchase the house outright, talking to a mortgage lender about the amount of money you need for the deposit can help you know exactly what to bring to the table.  

 proof of funds letter for real estate purchase

What if I Do Not Have Proof of Funds?

The request for a proof of funds letter is not always a matter of trust. In fact, if a seller went by the word of every prospective home buyer, they could lose valuable time and money. For this reason and others, the proof of funds letter is requested. 

If you cannot produce it, do not get offended. Instead, use these tips to handle a lack of proof of funds:

  1. Challenge a Trust Issue

If a seller is concerned about your ability to obtain the money, they may not let you move ahead. Challenge their trust and offer them a letter of proof of funds based on a personal, professional, or other type of reference,  and move forward with the process. 

  1. Demonstrate Your Intent

If you are lacking actual proof of funds, you can show your credibility in other ways. Demonstrate your intent to invest with a formal letter, along with a personal biography, and a cover letter if you do not have available funds. 

  1. Get Proof

Liquid assets may not be available, however, in lieu of an official proof of funds statement, you may be able to use this third option. Get proof of your investments directly from an investor, and use it as a proof of funds without liquid accessibility. 

Proof of funds letter for real estate purchases is simple to obtain. However, you need to know that having all of your paperwork ready will make a BIG difference in how smoothly the home buying process goes. Go ahead, and get all of your funds transferred and collected before making an offer. 

If you need any help preparing the paperwork, talk to an experienced real estate professional at the offices of Jeff Barchi