On Demand Proof of Funds Letter

What Is a Proof of Funds Letter?

A proof of funds letter corroboratesĀ that the buyer has the funds available to complete the transaction. Many agents get the proof of funds letter confused with a pre-approved mortgage letter from a lender. The difference is that the pre-approved mortgage letter is simply a promise to lend funds, while the proof of funds letter says that the buyer actually has the necessary funds on hand.

Proof of Funds

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Why Get a Proof of Funds Letter?

If a buyer is waiting on the sale of a previous home or the proceeds from the sale of stocks to pay for the transaction, then those are not guaranteed funds. The buyer needs to have their cash obligation on hand in order to complete a real estate transaction. The proof of funds letter is the assurance you and your client need when completing a transaction that requires any cash. The most common instances where a “proof of funds” letter is appropriate are transactions that will be done completely in cash, or transactions with large down payments.

Who Generates a Proof of Funds Letter?

If the lender is willing to commit to the mortgage, then the letter can come from the lender. If it is a cash transaction, then a bank statement should suffice. If there is an outside finance company committing the money to the buyer, then that finance company will be able to generate the proof of funds letter. Real estate software that provides you with on demand proof of funds letters is an asset in real estate investing, saving you time and money.

When you have a real estate transaction that involves a lot of cash, then a proof of funds letter is essential. It protects your client from the possibility that a closing date could be moved because of a negligent buyer.