Proof of funds (POF) is a document or set of documents demonstrating that a person or organisation has the ability and funds to complete a transaction. A bank, security, or custody statement is generally used as proof of funds. The proof of funds document's goal is to ensure that the money required to complete the transaction are completely available and legitimate.
The seller frequently wants proof of finances when an individual or corporation makes a big transaction, such as purchasing a property. This assures that the buyer not only has the money to complete the purchase, but also that he or she has legal access to the cash because the proof of funds comes from a trusted source, such as a bank. The seller and/or mortgage company want to know if you have enough money for the down payment and closing costs, especially when buying a home.
It's vital to remember that evidence of money in most cases must refer to liquid capital, typically cash. Retirement accounts, mutual fund accounts, and life insurance are examples of investments that do not qualify as proof of funds.
There is particular information that must be included when submitting a proof of funds document. Some of the most typical pieces of information that must be reported on a proof of funds document are as follows:
If you plan to utilise funds from numerous accounts to make the purchase, you'll need this information for each one. It may be more convenient to transfer all of your cash to a single account, requiring you to provide this information only once and making the total amount of funds accessible easier to track. Most banks can provide you with a proof of funds document within a day or two.
You'll want to keep your proof of funds document safe at all times once you've received it. Some con artists may seek/request proof of funds as part of a financial scam to ensure that they are focussing their efforts on someone with significant financial value. It also contains sensitive financial information that must be protected. As a result, it's critical to make sure you only disclose proof of finances to people you know and have thoroughly vetted.