Q & A: What Does "HARD" Proof of Funds mean ?

By
Real Estate Agent with RE/MAX Realty Group MDRE# 322086

 

Many Buyers are looking to purchase distressed property as the Spring market brings out NEW inventory of REO's and Short Sales. Many are trying to secure the winning bid with an ALL CASH purchase or with a LARGE down payment using an Investor or Conventional Loan.

Many of these clients must wait 15 (fifteen) days before they can even submit an offer as many banks are trying to give First Time Homebuyers and/or Returning Homeowners the first opportunity to secure a contract on these houses.

I know that many of my Investor client ask me to package an offer together on the off chance that there won;t be any bids from owner occupants. Then once the 15 (fifteen) days have passed , they have me submit the offer according to the Listing agents instructions.

When preparing an offer that is all "CASH" or has a "LARGE" down payment the mortgage company will request the agent to verify the funds that the buyer is using to purchase the property. These funds are called HARD PROOF OF FUNDS and they can come in several accepted formats as noted below.

  • Current Bank Statement - Checking or Savings
  • Money Market Fund , Self Directed IRA
  • A dated statement from the Purchaser's bank on letterhead signed by the Branch Manager with the financial information noted.

All of these "HARD PROOF OF FUNDS" must of course have the same name on them as the name of the purchaser on the contract offer. The other rule of thumb that a buyer agent should be aware of and inform their client of is that the statements can not be more than 30 (Thirty) days old , and is some cases no more than 14 (Fourteen) days old.

Due to these restrictions you would want to inform the buyer to send you another set of updated financial statements as the mortgage company may not always respond and.or accept the contract before the HARD PROOF OF FUNDS are older than 30(Thirty) days old

 

 

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REO
Montgomery County Maryland Real Estate Professionals
Short Sales and Forclosures ONLY
Short Sales Specialists
Tags:
homes for sale short sale
hard proof of funds
homes for sale foreclosure

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Rainmaker
1,268,064
Al & Peggy Cunningham, Brokers
RE/MAX West Realty Inc., Brokerage - Brampton, ON
Our Family Wants To Help Your Family!

Interesting advice Laura. It is better to understand that you have the hard proof of funds before you enter into an agreement.

Mar 06, 2013 10:10 PM #1
Rainmaker
183,995
Laura Gray
RE/MAX Realty Group - Gaithersburg, MD

Al & Peggy - This is so true , you must set the expectations upfront

 

As Always Thank You for Stopping By

Mar 07, 2013 02:07 AM #2
Rainmaker
386,734
Mark Horan
Resident Team Realty, LLC & Toni's Property Management LLC - Saint Cloud, FL
"The Resident Chef" - Resident Team Realty LLC &

Laura, the process really doesn't make sense as I had a buyer that bid $10,000 over list price cash! The was after the 15 day period. The bank took an offer financed $15,000 less?

Mar 07, 2013 02:18 PM #3
Rainmaker
183,995
Laura Gray
RE/MAX Realty Group - Gaithersburg, MD

Mark

 

It has been my experience that if the house needs very little cosmetic work and nothing else , the bank will work with an owner occupant contract first. If it needs major work or has MOLD they will select an Investor contract.

 

As Always Thank You for Stopping By

Mar 11, 2013 05:29 AM #4
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Rainmaker
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Laura Gray

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