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How to Survive Your First Mortgage

March 07, 2017



sold. our first house


The time has come. You have a savings plan in place and a five-year dream. You have been cleaning up your credit and calling up your old friends from high school who now work as real estate agents. You’re spending Sunday afternoons driving around your favorite neighborhoods looking for “For Sale” signs. You’re ready to make the leap, and apply for your first mortgage. Your first home will possibly be the largest purchase and investment you ever make, but luckily, there are many special programs and discounts available for first time home buyers just like you.

You may think you’re completely prepared to apply for a new mortgage, but you should consider all aspects of your financial situation, before you make the commitment. Begin prepping and planning for your first mortgage about six-months before you even start touring new homes.

Make a 10-Year Plan

Where do you plan to live in 10-years, and what do you plan to be doing? If you frequently switch jobs or have to move often for your career, you may want to think twice before committing to a mortgage. Ed Conarchy, a mortgage planner and investment adviser at Cherry Creek Mortgage in Gurnee, Illinois advises that you should plan to live in a house for about “Five-to-seven years,” in order to make good on your investment.

Taking up a long-term residence in a home means that there are many things to consider in terms of where you want to live, and how much you can afford over an extended period of time.  Where you purchase a home will become imperative over the long-term. You need to consider the local schools, neighborhood safety, and any development projects zoned for that area.

Build Up Your Savings

You should ideally have 10-20% of your down-payment, and at least 3-6-months of emergency savings, before you search for a new home. This will not only increase your chances of prequalifying for a mortgage, but it will also help take care of any unexpected costs that may arise during the home-purchasing process.

Purchasing a new home should not deplete all your savings. If you are unable to pay for your down-payment and closing costs without draining your bank account, consider saving for a longer period of time.


Visit a loan officer or a credit counselor at least six-months before you begin house hunting. Have them run a detailed credit report. Most financial institutions, such as Finger Lakes FCU, run free credit reports for first time home buyers. This process will identify any unknown marks against your credit that you may not know exist.

On-time payments do not guarantee a high credit score. Other factors also impact your score, including how much credit you’re utilizing, as well as your debt-income ratio. You want to be utilizing only 30% of your available credit when you apply for a mortgage. Repairing damaged credit takes time, which is why we recommend you give yourself six-months or more to receive a copy of your credit report, and make any necessary fixes before you start house hunting.

Take Advantage of First-Time Home Buyer Programs

Once you meet with a loan officer to prequalify for a mortgage, he/she will let you know about any first-time home buyer incentive programs available. These programs offer perks such as fixed-rate or adjustable-rate mortgages. However, you may need to meet certain income requirements. Also, if you had purchased a home in the past few years, you may not qualify. You could also be eligible for a loan from the Federal Housing Administration or other grants.

New home buyers who apply for a mortgage through FLFCU would be eligible for The First Home Club. The First Home Club, available through the Federal Home Loan Bank of New York (FHLBNY), helps put homeownership in reach for first-time homebuyers by providing grants of up to $7,500 to be used toward down payments and closing costs

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