A proof of funds letter can be defined as an essential document which works in demonstrating the fact that a person has enough funds to support a transaction. This document frequently comes in security, custody, a lender letter or bank statement form. Its main purpose is to make sure that the interested party gets enough proof that the required funds for a specific transaction are not only obtainable but legitimate as well. This type of document is sometimes requested by a seller or lender who intends to propose an offer to a buyer or borrower. Once this document is requested, the interested buyer or borrower will then authorize his bank or any other institution which often furnishes this document to present data confirming his ability to honor all the terms in a specific transaction.
A proof of funds letter has numerous uses. The right document will prove that you can meet certain net worth requirements. You can also use it as a proof of liquidity, representation of your ability to offer down payment on a specific property and your capability to qualify for financing. The document is also ahuge help if you are planning to access opportunities that are not usually available without any significant collateral or proof of liquidity. You can use it to boost your investment potential and acquire financing within just a few days in case you use it to apply for a loan.
If you are an investor, then note that a proof of funds letter will also serve as a powerful tool in successfully closing certain transactions. It proves your legitimacy as an investor so it is possible for you to win the trust of sellers. Without this document, it would be difficult for a seller, lender or any other institution to decide whether to do business with you. In order for your proof of funds to become more effective, you have to make sure that it is valid and sufficiently covers vital areas in a contract including purchase price and closing costs.