Proof Of Income: Do You Need To Show It Before You Buy A Home?
Posted on: 11 October 2021
If you hope to buy a home soon, you may need to show proof of your employment, credit history, and finances before you do so. Finance companies, Realtors, and even sellers need to know whether or not you can afford their property before they work with you. To keep from losing out on your next home, you need to show proof of income. Learn what proof of income is and how you can show it below.
What's Proof of Income?
Sellers, real estate companies, and lenders need to obtain certain information from you before they sell or finance a home to you, including proof of income. Proof of income documents are documents that show sellers, realtors, and lenders how much funding you have available to purchase their property. The documents can come from your bank, employer, or personal accountant.
Proof of income documents also help determine the type of down payment and/or closing cost payment you need to make before you finalize your new home. The information keeps you from making a down payment or a closing cost payment you can't afford to make at this time. Lenders and realtors can use your financial information to calculate the best payment amounts for you.
Now that you know what proof of income is and why you need it, you can take steps to obtain it.
How Do You Show Proof of Income?
You can use different types of documents to show proof of your income, including your bank statements. However, your bank statements must be up-to-date and readable. The statements should also show how much money you have in your checking and savings accounts.
If you don't want to use your bank statements to verify your income, ask your bank for a proof of funds letter instead. A proof of funds letter, or POF letter, shows the:
- amount of funds in your account or accounts
- address of your current home
- contact information for your banking institution
You can also use a POF to show information about other accounts you may have on hand, such as retirement funds and investments. If a lender or real estate company needs to see other information about your financial accounts, they'll ask you for it.
If you choose to use the proof of income documentation above to buy your new home, be sure to keep copies of the documents in your possession. If you wish to buy another home in the future, you can use the documents as a guide to help you get started.
If you are a home buyer and you want to learn more about proof of income and how it can help you buy a home, contact a real estate company today.
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