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.
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.
Appraisal
The lender will order a new appraisal, if needed, once you submit your application. Your loan application will ask you what you think your property is currently worth, but don’t be concerned about getting it perfectly accurate, as a general idea is sufficient.
An appraiser will be assigned to provide a current market value of your home based upon recent sales of similar homes located in your neighborhood that have sold within the previous 6-12 months. A title report will also be ordered in addition to other third-party services needed to close your refinance.
With refinance loans that require an appraisal, you can expect to pay anywhere from $300 to $600 depending upon the current value of your home according to the appraiser. On the application, you will be asked what you believe the current value of your home is. The appraiser will take it from there and arrive at a final adjusted value by researching at least three recent sales of similar homes in your area and comparing those final values with your home.
Underwriting
Once your file is completely documented with an appraisal, title work and the paperwork you provided, the file is delivered to the underwriter. The underwriter is the individual that makes sure the loan submitted meets the established guidelines of the program being applied for.
Once the underwriter has determined the loan does in fact meet all the guidelines, it moves to the closing department. If the underwriter has questions about some of the information submitted, your loan processor will contact you for any additional information needed. If more information is needed, don’t delay. The underwriter then signs off on the loan and the file is sent to the closing department which prepares the loan for closing.