So, you’re getting ready to buy your first home, and you suddenly get asked for your proof of funds. You immediately run to Google to quickly figure out what is needed on your end in order to solidify your home purchase.
Instead of stressing, BSR Realty Group is here to help educate you on the items you need during the home buying process. Our Home Buying 101 blog series ensures that you will have everything you need to have an easy, turnkey home buying experience. If you’re unsure of what proof of funds is, we’re here to break it down for you…
What Are Proof of Funds?
First and foremost – what are proof of funds? Proof of funds, better known as POF are documents that show a person’s ability to fund the purchase of a large transaction, such as purchasing a home. Think of it as a resume – you provide the paperwork to show you’re a qualified candidate, and from there, you either get the job (aka the home) or not.
What are some examples of POF that are accepted?
Some examples of POF include:
- Bank statements
- Security statement
- Custody statement
Note, that all POF need to have basic information such as your bank’s name and address, bank statement, balance amounts and totals, and the official signature of the bank.
Some examples of funds that will not work for POF include retirement funds, investment portfolios, and life insurance. You want to make sure you are showing POF in the form of liquid/cash assets.
Why is this needed?
Proof of funds are necessary when purchasing a house because it ensures that the buyer has the money available for the purchase. It also confirms that the buyer is receiving their funds from a reputable and legal source, such as a bank. In laymen’s terms, the seller and/or mortgage company want to make sure the potential purchaser has the funds required in order to buy the home, deposits, and all other necessary home buying fees.
So, what do I do next?
In order to request your proof of funds, you want to make sure you coordinate with your bank. You’ll want to make sure your POF document includes the assets listed above as well as work with your bank to get you the signature needed. You might want to also think about putting all of your funds into one account to make the process a little easier. Make sure you keep your POF in a secure place once received and be careful of sharing the document with potential scams/con artists.
From there, give your POF to your trusted individual and you’ll be on your way to the next step in the home buying process!
Ready to continue through the home buying process? Contact BSR Realty Group today to get started on the home buying process!
