By The Kent Redding Group
AUSTIN, TX. – Are you planning on buying a home in 2018? If so, one of the many things that you will have to present to the buyer is a proof of funds letter.
A proof of funds letter verifies that you indeed have the funds or “liquid cash” to purchase the home that you’re interested in buying.
In today’s competitive real estate market every home buyer must present a proof of funds letter to the seller because this letter will give the seller confidence that you are able to afford the home.
All Buyers Need A Proof Of Funds Letter
Regardless if you’re paying cash or financing an Austin Texas Home, you’re going to need a proof of funds letter.
While lenders will delve deep into your finances to ensure you have the necessary cash on hand to close the deal, home sellers will also want to see that you have these funds set aside. That's why you provide them with a proof of funds letter, as well as your pre-approval letter from your lenders confirming that they're willing to loan you the rest of the money you need.
Proof Of Funds Vs. Pre-Approval Letter – What’s The Difference?
As a home buyer you may be wondering if there’s a difference between the proof of funds letter and the pre-approval letter.
A pre-approval letter from your lender shows that you’ve been pre-approved for a mortgage loan while a proof of funds letter shows that you actually have the cash ready to close the deal so yes, there is a big difference between the two letters.
Proof Of Funds When You Have Liquid Capital
Let’s say that you currently have funds in a money market account or credit line that you plan on accessing or using for the down payment for your home. In these cases you may be able to show statements from these accounts as proof of funds.
If your funds are dispersed among various other accounts like stocks or mutual funds, you should withdraw or transfer the funds that you need from these accounts immediately because it can take time for these transfers to complete.
Once you have the money ready in your account that you plan using for your down payment and closing costs you should ask your lender for the proof of funds letter soon because it can take them up to 1 week to send you that letter and you don’t want that to delay your closing on a home.
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To search for homes in Austin Texas contact the Kent Redding Group today by calling us at (512) 306-1001 or click here to connect with us online.