What is a Proof of Funds (POF)?

When you're deciding to make a large purchase, like buying a home, there are a ton of documents that you need to prepare in order to follow through with the transaction. One of these documents is a proof of funds (POF). Let's dive into what a POF is, why you need it, and how you can obtain one.

What is a Proof of Funds (POF)?

A proof of funds letter is a document that showcases that a person or business is capable of purchasing something, as in, they have the funds to follow through with the transaction.

Requirements for a Proof of Funds

In order to be considered a real proof of funds document, it needs to include the following:

• Official bank statement
• Balance of total funds
• Balance of funds in the checking account
• Balance of funds in the savings account
• Signature of authorized bank personnel
• Bank's name and address

If you are planning to use funds from multiple bank accounts spread across multiple banks, you will need to acquire this information from each bank. 

Why do you need a Proof of Funds Letter?

A proof of funds letter proves to the seller that the potential buyer is authentic in their decision to pursue the purchase. Essentially, it demonstrates the ability to purchase in order to expedite the purchasing process.

How do you get a Proof of Funds Letter?

In order to obtain a proof of funds letter, you simply need to request one from your bank, or from the financial institution that holds your money. Typically, your bank will be able to process this request in less than a week.

Proof of Funds vs. Proof of Deposit

The difference between a proof of funds and a proof of deposit is that one occurs before a transaction, and one occurs after a transaction. A proof of funds is showcasing that the potential buyer has the ability to pay for something, whereas a proof of deposit is showcasing that the transaction has been successfully completed. 

Services at Modern Lending

When you're searching for your dream home or next investment property, it can be confusing knowing what you need to secure your payment. When you work with the professionals at Modern Lending, they can help take you through every step of the process. Ensure that everything goes according to plan by working with the loan officers at Modern Lending! Reach out today to schedule an appointment.