4. Getting Pre-Approved

Refinancing an existing loan is more that just about the interest rate.

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What is a Pre-Approval?

A pre-approval is a process that verifies the information gathered during the prequalification. Your loan officer will ask that you provide copies of your most recent pay check stubs covering a 30 day period as well as your last two years of W2 forms. If you’re self-employed, you’ll need to provide your last two years of personal and business federal income tax returns.

Your loan officer will also ask for copies of bank and investment statements from the accounts to be used for a down payment, closing, costs and cash reserves. A credit report will also be pulled to verify a responsible credit history. Once this information is reviewed, your loan officer will provide you with a pre-approval letter stating that you have applied for a mortgage, your income, credit and assets have been reviewed and all you need to do is find a property.

What Documents Do You Need to be Pre-Approved?

Because a pre-approval verifies via third party your income, assets and credit standing, you will be asked to provide copies of certain documents when you submit your loan application. You will need to provide:

Your most recent pay check stubs covering a 30-day period


Your last two years of W2 forms


If self-employed, your last two years of personal and federal income tax returns along with a year-to-date profit loss statement


Bank and investment statements for the accounts to be used for your purchase


Authorization to pull a credit report and credit scores


How Your Pre-Approval Amount is Determined?

Your pre-approval amount is determined by comparing your total monthly credit obligations, including a new mortgage, with your gross monthly income. This includes an auto loan payment, credit card and student loan payments and other credit accounts that appear on your credit report.

To make sure you have enough funds available to close, lenders will review your bank statements showing you have enough funds to close plus some extra left over referred to as cash reserves.

Your credit report will be reviewed along with credit scores. After income, assets and credit is reviewed, the lender will use current market rates to arrive at a monthly payment and qualifying loan amount.

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