Proof of Funds - Buying A House
Proof of Funds are needed anytime investors are buying a house from the bank to flip to another investor or rehabber for profit. Proof of funds is a way for the bank to verify that the investor does in fact have the necessary funds to complete the transaction.
Proof of funds can be created two ways. The first way is through a simple letter from the 3rd party who is backing the investor. The second way is through an actual bank statement, referred to as a VOD or verification of deposit. It depends on the bank and the deal as to which form investors must provide. Some banks will ask for a VOD and others are ok with a simple proof of funds letter.
Proof of funds is not the same as a simple pre-approval letter you can get from your mortgage officer. A proof of funds letter is actually created by the company who is giving you access to and allowing you to use their funds. A pre-approval letter just says you qualify based on your income and credit to borrow money. With proof of funds it's not about your credit or income, it's about the deal. Never do we check credit or income when providing proof of funds for investors.
Proof of funds works hand in hand with transactional funding. Transactional funding is used by investors for quick flips because the money is only used for a short period of time and as mentioned above, it doesn't require and credit or income verifications. Investors prefer this approach over conventional loans because it's easier and it's less risky because they are not getting a loan in their name. All the risk lies with the 3rd party lender.
Proof of Funds Requirements
Investors who need proof of funds for buying a house will need to make sure they have the following:
- Company or name who is buying the property
- Sellers name
- Address of property - sorry no blanket proof of funds letters
- How much is needed
- Contact info
Once you receive your proof of funds letter, you will submit it to the bank with the rest of the paperwork. Almost always when submitting a cash offer they will ask for it, so you'll want to send it a head of time. If they request a VOD instead, then you can submit an actual bank statement.
Proof of Funds for Cash Offer
If you are needing proof of funds for cash offer, then yes, you've come to the right place. We provide proof of funds for cash offer for investors all over the nation. It's by far the best way to facilitate a transaction with the lowest risk.
One of the key components to making it all happen is the end buyer. While an end buyer is not necessary in order to get proof of funds, it is necessary however to have that end buyer lined up in order to use the transactional funding. If you can find a cash buyer, that is by far the best way to go because they don't have to jump through all the red tape that most conventional buyers have to jump through.