Money is weird.
That is, talking about money is weird.
Usually, it would be rude of you to go up to a stranger and ask them how much money they make or what they plan to spend on a car, etc., etc.
In the case of a major purchase, however, there is no way around it!
When you purchase a house, whether you are getting a loan or paying cash, you must have proof that you can afford it. This documentation is referred to as the “Proof of Funds.” Sellers want to know you have the ability to buy the house before the accept your offer. Be prepared to show them you can before you get to that step in the process. Sellers want to know this to avoid going under contract and then having the deal fall through for financing. Sellers and listing agents don’t enjoy taking the house off the market unless the chances of closing are high. Knowing you can afford the house gives them confidence that the deal is likely to close.
When you are preparing to buy a house, one good thing to do would be to go ahead and grab one of the following, if not all of the following:
- Original Bank Statements (you can black out the account number)
- A letter from your Financial Institution with official letterhead stating you have the money in some type of account.
- PreQualification Letter from a Lender stating that you can get a loan in the amount of the house you’re trying to buy.
Sometimes, your family (or whomever) are gracious enough to “gift” you the money for a down payment. Since this is not money that you earned and not a loan, whoever is gifting you must write a letter stating what the funds are for, how much, and sign.
Basically, you just need some sort of official document proving that you have the funds to pay for your house.
Like I said before, money is weird, and talking about money is usually a societal “no no,” but when it comes to your real estate agent, your lender, and the title company, you have nothing to worry about. No one is here to judge you, only to help you. In this industry we talk about these things all of the time.
Your loan officer will need to know your entire financial situation in order to get you the appropriate loan, and your agent will be able to help you navigate what you can afford when buying a home.
In this case, talking about money doesn’t have to be weird. Gathering your proof of funds is just another step in the transaction process!
It’s important to choose your real estate agent carefully and wisely. You don’t want an agent who misses this step and causes you headaches down the road. When you’re ready to hire a real estate agent, I’d love to represent you in the purchase or sale of your home. Call me, Jill Bell, at 479.799.3023.