Why Smart St. Louis Home Buyers Provide a Proof of Funds Letter
St. Louis homeowners are going out on a limb when they accept a buyer’s offer. They do not know the buyer and they are trusting that they are going to provide the funds necessary to make the purchase. Some St. Louis homeowners want proof that the buyer is reliable and ask them to prepare a proof of funds letter. This letter shows the homeowner that the buyer is prepared to buy the home without any complications.
Buyers Who Need a Proof of Funds Letter
A proof of funds letter is important for every St. Louis buyer. No buyer should make an offer without this letter already drawn up. This will help to prove to the homeowner that the offer should be taken seriously and that the buyer is ready to make a purchase.
Lenders often go through the process of pre-approving a borrower. This pre-approval states that the lender is willing to give the buyer a mortgage. A St. Louis buyer that has a pre-approval and a proof of funds letter is telling the homeowner they not only have a mortgage secure but their down payment and closing costs, as well.
Even a St. Louis home buyer that is making an all-cash offer should include a proof of funds letter. It is important in this situation since there is no lender that is footing a majority of the bill. It is simply the buyer’s word that they are going to pay in cash for the home.
Why Have a Pre-Approval and a Proof of Funds Letter
Buyers often get pre-approved for a mortgage and think that this is enough. It is a good first step when buying a house. Knowing the exact amount a lender will offer makes it easier to find the right St. Louis home. However, a pre-approval does not show the seller that the buyer has enough money to close on the loan.
The proof of funds letter shows that the deal will not fall through. Some buyers are not aware of the amount of money that goes into closing. They may dedicate all their money towards their down payment and be unable to complete the loan process due to lack of funds.
The Proof of Funds
A proof of funds can be obtained from a bank. Most people have a savings account where they hold their down payment or the money for their closing costs. This account will be the proof that the funds are available. Ask the bank who holds the account to provide a report that there is cash available.
There are other ways people store money. Some prefer to invest their money until they need to use it. Investing in stocks is a good way to make money but it can also be a good way to lose money. There is no saying when a stock will rise or plummet so they can not be used as proof of funds.
Having multiple savings accounts may also make this process difficult. If possible, take all money and put it into one account. This will make it much easier to prove the full amount needed is there. Be sure to have records of these transfers as the lender will want to see where all of the money came from if it was in a different account.
Getting a Letter
Most banks are happy to provide a proof of funds letter. In most cases, the bank will have the letter prepared within a few days. If there are any discrepancies or problems this can take up to a week. Always ask for this letter before needing it so there is no rush to get it.
A Valid Letter
A proof of funds is not much more than a glorified bank statement. Most letters have the name of the buyer, their balances in their accounts and will be printed on the bank’s personalized paper complete with a letterhead and a signature from a bank employee.
Some homeowners are willing to take a current bank statement instead of a formal proof of funds letter. Just remember to black out any sensitive information. Some statements provide social security numbers and other pieces of information that would give the homeowner access to accounts.
Obtaining a proof of funds is an easy process. There is no reason not to provide this letter with an offer. It can only increase the chances that a St. Louis homeowner will trust that the offer is legitimate. Do the legwork first and get the letter before the homeowner asks for one.