What Is a Proof of Funds Letter, and When Do You Need One?

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There’s a lot that goes into buying a home, from finding a real estate agent to researching neighborhoods to visiting open houses — and then there’s the financial side of things. You’ll be working closer with a bank than you probably ever have before,  and, as a potential buyer, you’ll start submitting mountains of paperwork to your lender and real estate agent. Fortunately, you can keep yourself from getting lost in the flurry of purchase contracts and signatures by boosting your understanding of some of the documents that are essential to — and just plain helpful for — the home-buying process. One of these beneficial pieces of paper is a proof of funds letter, or POF.

Understanding what a POF letter is, why you need one and how it differs from a pre-qualification can make your home-buying adventure a smoother one and take some of the uncertainty out of the financial aspect of this life-changing process. Take a look at all the need-to-know basics about POF letters as you start searching for your dream home.