How To Get Approved for a Proof of Funds Letter

Frank Chen

Hi, this is Frank Chen with REIClub.com, the only site you need as a real estate investor. Today I've got quick video on how to get approved for a proof of funds letter.

Proof of Funds Letter:

Document that ensures the seller that the funds required for the real estate transaction are obtainable and legitimate by the buyer.
Most all sellers, now, require POF before considering offers
Let's seller know you are in talks with a lender/or currently have funds = serious buyer / strengthens offer

Where Can You Get It?

Banks
Mortgage Brokers
Hard Money Lenders / Private Lenders
Transactional funding companies

Requirements:

Have the funds:

Recent bank statement for that account – You can blank out any details on the statement that are unrelated to the issue in hand, but the seller will want to see contact information for the bank holding the funds, the buyer's name, and the statement date.

Don't have the funds:

Traditional Lenders

Pre-Approval
Credit history – rates dependent on credit score
Debt-Assets ratio – credit cards, mortgage, car payments, etc…
Monthly Income
Approval period: 1-2 weeks
Harder to qualify

Private Lenders / Hard Money

Not all lenders are credit score driven
Deal specific – equity in property – usually look for quick closing opps.
End buyer in place (B-C closing)
Approval period: 1-3 days
Easier to qualify, less stringent stipulations

When You Will Need It:

Back-To-Back Closings / Double closings
Transactional funding
Short sale transactions
REO purchases

Acceptable Documentation:

Bank statements should be in the name of the purchaser, funds should be in the purchasers account.).
Proof for Funds must be in the account of the person who is writing the offer.
Proof of funds must be dated in the last 30 days.

Having access to a proof of funds letter is just ONE way of strengthening your offer. If you are new to investing, and you want to be taken seriously and build credibility, be sure to get your funds in order before submitting any offers. I have included a link below to a proof of funds resource, take a look.

Again, this is Frank Chen with REIClub.com. Please take the time to leave your comments for this video below and please subscribe to our YouTube channel so you'll be automatically notified when we upload more quick video tips for you. Take care and good investing.