Chris Gmyr

When you’re preparing to enter into a contract to buy a home, you will probably have to give the seller proof of funds. In other words, before you can buy a house, you have to prove that you have the means, financially, to make that kind of purchase.

What constitutes proof of funds? An official document, or documents, with specific financial information included. As a buyer, you will probably need proof of an adequate down payment and closing costs. A preapproval letter from a lender is often not enough.

Some buyers may see this as an intrusion into their privacy. Why should the seller, and the seller’s agent, have the right to this kind of information? From the seller’s point of view, however, it makes a lot of sense. Before taking a home off of the market, it’s good to know that the sale won’t fall through because the buyer has a loan, but can’t afford the closing costs or down payment.

To prove that you have the funds to buy a home, you will probably need one of the following:

• certified financial statement
• open equity line of credit
• recent (original) bank statement
• online bank statement
• copy of money market account balance
• signed letter from your bank stating that you have adequate funds for the purchase

Providing a copy of one (or all) of these records proves that you do have the money ready to buy a home, and can expedite the buying process. These documents will be submitted when you sign the contract, or when all of the contingencies on the purchase have been signed off.

If you are a cash buyer, meaning that you will not need a loan to buy the home, providing proof of funds is even more essential. You don’t have the benefit of a preapproval letter stating that the money is available from a lender. You need to be able to prove that the entire cost of the home is readily available for the sale. You will need one of the documents listed above.

If you have more questions about providing proof of funds when buying a home, your Syracuse real estate agent, or your lender, should have the information you need.