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Proof Of Funds - POF


What Does Proof Of Funds - POF Mean?
A document that demonstrates that a person has the ability and funds available to use for a transaction. It usually comes in the form of a bank, security or custody statement. The purpose of the document is to ensure that the funds required for the transaction are obtainable and legitimate.



Investopedia explains Proof Of Funds - POF
Some con artists who are planning a financial scam will request a proof of funds. They want to make sure that they are concentrating their efforts on someone with significant financial worth. Therefore, it is important to make sure that you only give proof of funds to trusted individuals whom you have thoroughly investigated.






This is not a loan, however, it is not just a piece of paper. Our proof of funds are real accounts with actual cash-backed deposits.

  • Sometimes Proof of Funds is called 'leased funds' or a 'cash collateral' account.
  • We arrange an account in your name or your company's name at our bank.
  • The required amount of are deposited into that account.
  • We remain the sole signatories on the account.
  • We will open the new account, and the money will never move from the account.
  • The account will be in your name for 30 days. Extensions are available.
  • We also offer special pricing for those needing Proof of Fund accounts for length of one or more year.


Painless and Easy



These are true cash collateral accounts. The Proof of Funds is valid for the 30-day period stated and may be extended.

  • NO background check
  • NO credit report
  • NO credit scores
  • NO Business plan
  • NO Executive summary
  • NO LTV ratio
  • NO real estate appraisal

Proof Of Funds Letter

A major short sale concern of the lender is investing the time and effort in negotiating a short sale then having the buyer not close on the short sale. Because of this possibility you can expect the lender to request a "Proof of Funds" or a "Mortgage Commitment Letter" as a required part of the short sale package.

This request is often a major obstacle for real estate investors that are flipping the deal with what is known as a double or simultaneous closing. What to do?

Here are several possible solutions:

  1. Bank Statement. If you have the funds available send the lender a recent bank statement as proof of funds.

  2. Obtain a Proof of Funds Letter. This letter can be obtained from your bank, mortgage broker, private money lender, hard money lender, or anybody that has the ability to fund the transaction.

  3. Mortgage Commitment Letter. I'm not a fan of the Mortgage Commitment Letter because a lender issues a loan commitment after it has approved both the house and you. The home appraisal must meet the lender's guidelines and the lender may require the property be in a better condition then the current state of the home. For this reason I feel a MCL is better suited for buying houses that do not involve a short sale.

  4. Home Equity Line Of Credit (HELOC). If you have available equity in a property a HELOC on the property can serve you well. First, there is no cost on most HELOC for unused lines of credit. Second, it meets the lenders guidelines as proof of funds even if these are not the funds you intend on closing with.

The bottom line is unless you have an established relationship with the lender it is likely you will have to show proof of funds in some manner. If you are new with limited resources find a good hard money lender to work with and they can provide the letter you need.

Click Here For The Easy Way Of Doing Short Sales

Making money in real estate with short sales and foreclosures.  How to do short home sales, articles and information and our short sales boot camp.

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