How to Obtain Pre-Approval

Step-by-step process for obtaining home loan pre approval

Part 1 of 4 discussing the loan process in the “Mortgage Basics” series.

The Loan Process Part 1: Pre Approval
The Loan Process Part 2: Underwriting
The Loan Process Part 3: Appraisal
The Loan Process Part 4: Loan Funding

When you first decide you would like get a purchase or refinance loan, you’ll need to fill out an initial loan application in order to prequalify for a loan. This can be done online, or you stop by one of our offices and speak with a loan officer. Call us at 805.543.LOAN with any questions.

The loan application is a four page document which includes your residence history, employment and income history and assets and liabilities.

We usually ask for a two year minimum on the residence, employment and income histories. Along with the loan application, we ask that you supply all supporting documentation. This includes two years of federal tax returns,W2s and/or 1099s, pay stubs from the past 30 days of employment and bank statements from the past 60 days.

Once all the paperwork has been gathered and accurately filled out, we will run a credit check, as well as verify that we have all accurate and necessary information to move forward. Then, you’ll be asked to sign the initial disclosures, and the loan is processed through Fannie Mae, Freddie Mac or another government automated underwriting engine (depending on the loan) for official pre approval. Once this occurs, you can lock in your rate and get the terms fixed, or you can float the rate if you think there’s a chance of market improvement, or you’re still uncertain when you want to close.

Pre approval can be done in as little as an hour if you have thoroughly completed the loan application and have all the needed paperwork to support the information on the application. Things will take longer if you don’t supply the correct or thorough enough information, or if needed documents are missing. It’s best to stay in communication with your loan officer if you have any questions, so this process can go smoothly.

New Listing! 4 Bedroom 3 Bath in Paso Robles

This home has been beautifully remodeled. 4 bedrooms. 3 baths. Gorgeous wood floors. Grand master retreat is upstairs. Guest bedrooms are downstairs. Fabulous kitchen with stunning cabinets, roll out shelves, Miele warming oven, Jenn-Air stovetop, and paneled refrigerator. 18X18 floor tile. Dining room with skylight. Office area with built-ins. Wine cabinet with built-ins, pull-out shelves. Spacious living room. Family room has fireplace, built in TV cabinet. Wet bar with refrigerator. Rinnai tankless water heater. Several solar powered attic fans contribute to home keeping cool on hot days. Just finished installing new fence in back and side yards. New roof as of Aug. 2015. Freshly painted exterior and interior. Recently installed Synlawn in frontyard! Extra parking on side of house, room for RV, double gates. Wonderful home!
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Mortgage Refinance

Refinance allows borrowers flexibility with their mortgage: change term, monthly mortgage payment, interest rate, and more.

Borrowers might choose to refinance their loan for any number of reasons:

  • Reduce term, save thousands off future interest payments
  • Reduce rate, drop monthly payments
  • Take cash out, consolidate debt or make home improvements
  • Drop Mortgage Insurance, save thousands off monthly payments

Every loan  (Conventional, FHA, USDA, VA, Manufactured Home) has its own signature programs and standards. And where those don’t succeed, try something like HARP (link), to solve negative equity situations.

Below, we include a few notable programs and popular reasons for refinance.


The Home Affordable Refinance Program (HARP) allows borrowers may not otherwise qualify for refinancing because of declining home values or reduced income (DTI of 65 percent), the ability to refinance their mortgages into a lower interest rate and/or more stable mortgage product. HARP is unique in that it enables borrowers who owe more than their home is worth to take advantage of low interest rates and other refinancing benefits.

FHA Streamline

The FHA Streamline Refinance is a simple way for FHA borrowers to lower their monthly mortgage payment by refinancing into a lower mortgage rate. Borrowers must  display a history of consistent payments, and reduce their monthly payments by 5%.

VA Streamline Refinance (IRRRL)

The VA-backed streamline refinance product, called the Interest Rate Reduction Refinancing Loan (IRRRL), allows vets to drop their VA mortgage rate WITHOUT a new appraisal, WITHOUT asset documentation, and WITHOUT income requirements.

Cash-Out Refinance

A cash-out refinance loan is a great refinance option for borrowers looking to convert their home equity into cash.  A cash-out refinance replaces a borrowers’ current mortgage with a larger loan and uses the home’s equity to provide additional funds for other purposes, such as debt consolidation, home improvement projects, and more.

Eliminating Mortgage Insurance

Mortgage insurance is an additional monthly charge that may be assigned to borrowers who cannot pay 20% down on their home loan (notable exceptions exist). Once reaching certain equity and/or credit thresholds, the homeowner might be able to refinance into a new loan and drop (or significantly reduce) his/her/their mortgage insurance.

Thus, if you can afford the higher payment, it makes since to refinance into this shorter term, higher payment loan because it will net you thousands and thousands of savings over its duration.

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Exquisite Country Club estate home, built in 2004 (newest at the Country Club) by custom home builder Erich Schaefer. All primary living areas are on the first floor, including the master suite with an additional executive office and two baths downstairs. This 4,286 sq. ft., 6-bed, 4-bath 6th fairway home was constructed with the highest quality finishes. Large gourmet island kitchen, with commercial cabinet-panel front refrigerator. The upstairs is a spacious 4-bedroom, 2-bath floor plan. Home is designed to have long visual lines of sight from each vantage point. Radiant heat system under the beautiful hardwood floors. Great room with full surround sound. Foyer salon can showcase a grand piano. Private outdoor living and entertainment areas. Formal and casual dining areas. Additional washer and dryer in master. Steam shower. Three fireplaces. Minimal-traffic cul-de-sac location. See
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New Listing! Mid Century Modern Classic

First time ever on the market for this classic 1962 Mid-Century Modern classic. Over 2000 sq. ft. on almost 1/3 of an acre featuring 4 bedrooms, 2 baths, attached 2 car garage, indoor laundry, original hardwood flooring, 2 fireplaces, extensive built-in cabinetry, a gardener’s shed, and much more. One of San Luis Obispo’s best neighborhoods with views in every direction. For more go to
Bruce Freeberg 805.748.0161

New Listing! Located near Atascadero State Beach

This house is located a stone’s throw from the gorgeous Atascadero State Beach. Custom built in 2005 with approximately 2500 sq. ft including 4 bedrooms and 3 baths. An ocean view from the living/dining areas along with vaulted ceilings, an inviting fireplace to take the chill off and room for all your friends and family. The gourmet kitchen is complete with an island, wine rack and an abundance of granite counter tops and cabinetry. Neutral shades throughout along with an immaculate interior make this home move in ready. While strolling back from the beach, a wonderful 6 miles of white sand and blue seas sit on the outdoor patio and watch the sunset or just hop in the outdoor shower. Once you’ve entered through the gorgeous leaded glass doors, you will know this home is meant for you.
Elaine Giannini 805.235.1924

New Listing! 4 Bedroom 4 Bath Home

Cobblestone Creek! This exceptional 4 bedroom home features all the upgrades dreamed of by the fussiest buyer! With a bedroom and full bath conveniently located downstairs for privacy, the upstairs living space is meticulous and has a harmonious feel. The open, flowing floor plan features a large gourmet kitchen with a working island, granite counter tops, beautiful appliances as well as ample storage. Three additional bedrooms as well as two full (and one 1/2) bathrooms are conveniently located upstairs allowing easy access to the private backyard. The owner’s suite offers all the amenities on your wish list – walk in closet, dual sinks, and a separate garden tub and shower. Tranquil colors and natural lighting create a perfect setting for entertaining!
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CCL Market Update

Gallup US ECI

Gallup’s U.S. economic confidence index remained unchanged in the month of June at an average of minus 14, the same reading as in April and May. Early on in the month confidence was slightly higher averaging minus 12 in each of the first two weeks. Near the end of the month, however, confidence dwindled with weekly readings of minus 15 and minus 17 for the last two weeks of the month, offsetting the confidence boost earlier in the month.

Mortgage Applications

A sharp drop in mortgage rates to new three year lows reignited mortgage activity in the week of July 1st. Refinancing went up 21 percent from the previous week to the highest level since January 2015. Purchase applications rose 4 percent from the prior week to partially offset the three week long decline trend. From a year ago purchase applications are up an impressive 23 percent. Mortgage rates are only 10 points higher than their record lows.

Gallup US Job Creation Index         

US workers’ reports of hiring activity in their place of employment in June held at its record high first achieved in May. The plus 33 job creation index score in June represents 44 percent of employees saying their employer is hiring workers and expanding the size of its workforce minus the 11 percent saying their employer is letting workers go.

ADP Employment Report

June payrolls may pop back to follow previous trends after the disappointing May report, based off ADP’s private payroll estimate of 172,000, well above economists’ predictions of 150,000. This report like other indications on the labor market including jobless claims is a signal of health labor conditions.

Gallup Good Jobs Rate

June’s good jobs rate in the US was at a level of 46.0 percent, up slightly from May which was at 45.5 percent. This reading of 46.0 percent is the highest monthly rate Gallup has recorded since measurement began in 2010. The current rate is also half a percentage point higher than in June 2015. The percentage of US adults in June who participated in the work force was 67.5 percent, up from May’s 67.3 percent and above the 66.9 percent average workforce participation rate since June 2013. Gallup’s unadjusted US unemployment rate was 5.3 percent in June down from May’s 5.5 percent. June’s unemployment estimate is the second lowest for any month since Gallup began tracking it in 2010, after reaching its low of 5.2 percent in April of this year. Gallup’s US unemployment rate represents the percentage of adults in the workforce who did not have any paid work in the past seven day, either from an employer or for themselves and who are actively looking for and available for work. Gallup’s measure of underemployment in June was at 13.6 percent, down only .1 percentage points from May’s reading of 13.7 percent, another low since Gallup began recording in 2010. June’s rate also marks the fourth straight month of declining for underemployment since February’s rate of 14.7 percent. Gallup’s US underemployment rate combines the percentage of adults in the workforce who are unemployed and those who are working part time but desire full time work; 5.3 percent and 8.3 percent respectively.

Jobless Claims

Layoffs are on the decline as confirmed by yet another very low set of readings for jobless claims. Initial claims fell a very steep 16,000 in the week of July 2nd to a level of 254,000, below Economists’ low estimates. The four week average is at 264,750, about 5,000 lower than a month ago, a good sign for growth in the labor market. Continuing claims are following similar patterns, down a sizable 44,000 in the lagging data for the week of June 25th to a level of 2.124 million with the four week average up slightly to 2.148 million. The unemployment rate for insured workers is at a low 1.6 percent. The lack of layoffs doesn’t necessarily result in a rise in employment, but is a very favorable signal.

Bloomberg Consumer Comfort Index

In the week of July 3rd the consumer comfort index was at 43.5, down a bit more than a ½ a point since the Brexit vote. This decrease is a minor change, in contrast to the level that is it at which is very solid. Strength in the consumer confidence is ultimately tied to confidence in the labor market.

Employment Situation

May’s disappointing employment situation report has proved to be an outlier in what is otherwise a still favorable trend for the labor market. June nonfarm payrolls surged a much stronger than expected 287,000 vs a downward revised and recovery low increase of only 11,000 in May. Strength in June is led by a 38,000 gain for professional and business services. Telecommunications, fell 32,000 in May during the Verizon strike, rose 28,000 in June. Manufacturing showed a rare gain in a sizable 14,000 increase. The unemployment rate rose 2 tenths to 4.9 percent, this increase reflects strength and not weakness in the labor market as new people re-entered the labor force in June after being discouraged in May. Other readings are mixed with the average hourly earnings up only 0.1 percent for a 2.6 percent yearly increase and workweek remained unchanged at 34.4 hours. The second quarter payroll growth averaged a monthly 147,300 vs. a more substantial 195,700 in the first quarter. This report shows the labor market is solid but perhaps slowing and does not point to any urgency for a new Federal Reserve rate hike.