Proof Of Funds: What Is A POF Letter In Real Estate?
Author:
Victoria ArajMar 11, 2024
•8-minute read
When buying a house, it’s important to understand the requirements. You’ll need to provide certain documentation to obtain a mortgage, but did you know you may also need to provide a proof of funds letter to the seller?
Here’s everything you need to know about POF letters so you can obtain one and get the house of your dreams.
What Does Proof Of Funds Mean?
Proof of funds (POF) is a document that demonstrates how much money a person or entity has available. When purchasing a home, you may need a POF to prove to the seller that you can cover the purchase costs of a home. Remember that purchase costs can include the down payment, escrow and closing costs.
What Funds Qualify As POF?
There are several types of documents that qualify as proof of funds. In some transactions, a simple printed bank statement can qualify. Additionally, a certified financial statement or a copy of a money market account balance may also 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.
It’s important to note that your funds must be liquid to qualify. This means that mutual funds, life insurance, another person’s bank account, shares, bonds or proof of other possessions do not qualify as POF when you’re trying to buy a house.