Buying a home can be an intimidating process, especially for a first-time homebuyer. There is a lot to think about, from determining your budget to deciding on the right loan, and the process can feel both overwhelming and time-consuming.
I reached out to Scott Cronenberg, Mortgage Sales Manager with U.S. Bank, to discuss everything we thought potential homebuyers should know. Though the process is time-consuming – as buying a home is one of the biggest investments you can make – Cronenberg and his team can help ease your stress and make the process as painless as possible. Some might even find the process to be an enjoyable one.
To get started, I wanted Cronenberg to explain to me the difference between a mortgage lender and a mortgage servicer, as you’ll encounter both when buying a home. He simply explained that, “A lender loans the money and the servicer handles the daily functions of the loan once closed.” He continued, sharing that, “[The] easy way to think of this is the servicer is who you make payments to or call with questions.”
In some cases, as is the case with U.S. Bank, your lender will also be your servicer. According to Cronenberg, having two in one is “a great benefit” because “you know where your payment will go and who to call in the event of a question or an issue.”
With this understanding of the difference between a lender and a servicer, the first step in buying a home would be finding your lender. Cronenberg reminded me that, when finding a lender, “If it sounds too good to be true, it probably is.” So, do your research, ask around and always get a second opinion.
But, once you’ve found your lender, the next thing you’ll want to do is sit down and discuss your options. Cronenberg shared that this first conversation you’ll have is a “fact finding discussion.” Essentially, the lender will want to know more about your financial picture, goals and comfort level with payments, among other financial topics. Of course, all of this information helps the lender better understand you, the borrower.
Don’t feel uncomfortable when speaking with your lender, because the more information you give, the more easily he or she can help meet your homebuying needs.
“Anyone can input information into a website or app and get options,” said Cronenberg. “[U.S. Bank] believes the only way to give true guidance is to fully understand the borrower and his or her financial picture. This only happens by having a discussion and asking questions.”
The second thing I wanted Cronenberg to clarify was the difference between pre-approval and pre-qualification. The difference is pretty simple. “A pre-qualification is when you provide information to a mortgage loan officer to review,” said Cronenberg. “Based on a review of the credit and documentation provided, the mortgage loan officer will determine if the borrower is qualified.
“A pre-approval is when a file is submitted to an underwriter for formal credit approval,” continued Cronenberg.
According to Cronenberg, a pre-qualification can be completed in an hour or less, whereas a pre-approval takes a few days, as it is a more detailed process.
Buying a home comes with many costs. Apart from the mortgage itself, Cronenberg reminded me that a homebuyer has to think about down payment, closing costs (appraisal, credit report, taxes, title insurance fees, etc.) and pre-paid items (homeowner’s insurance and escrow items for taxes and insurance). Before beginning the homebuying process, have money set aside.
Buying a home doesn’t have to be scary. The most important thing you can do is find a trustworthy professional to help guide you through the process.
“U.S. Bank has consistently been named one of the world’s most ethical companies,” shared Cronenberg. “Our staff of seasoned mortgage professionals will always take the time to do what is right for our customers. We pride ourselves on building a relationship, not on completing transactions.”
Stop into U.S. Bank today and have that first conversation. Your new home is waiting for you.