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Tag: first-time homebuyers

  • Mortgage rates at 3-year lows, though high prices thwart buyers | Long Island Business News

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    THE BLUEPRINT:

    • 30-year fixed dropped to about 6.15%, the lowest since September 2022

    • Some lenders are advertising rates as low as 5.75% for qualified buyers

    • Nassau County median home price reached $840,000; Suffolk hit a record $725,000

    • Long Island remains historically low, limiting affordability and sales

     

    Prospective homebuyers are starting the new year with a glimmer of hope, as mortgage rates have dropped to their lowest levels in three years, though high Long Island continue to hamper housing market activity. 

    The average rate for a 30-year fixed-rate mortgage is now just north of 6 percent, which is lower than any point in 2025 and the lowest since Sept. 2022, according to Bankrate.com. 

    The average rate on 30-year fixed home loans decreased to 6.15 percent for the week ending Dec. 31, according to Freddie Mac. By comparison, rates averaged 6.91 percent during the same period in 2024. 

    While rates vary based on credit scores, down payment and upfront points, lenders are now advertising 30-year fixed-rate loans as low as 5.75 percent (U.S. Bank), 5.825 percent (Guaranteed Rate), 6 percent (M&T) and 6.125 percent (Bank of America and Wells Fargo). 

    And though mortgage rates have been considered high in the last couple of years when compared with the ultra-low COVID-era rates, the 30-year fixed-rate mortgage rate actually averaged 7.7 percent from 1971 through 2025, according to TradingEconomics.com, with an all-time high of 18.63 percent in Oct. 1981 and a record low of 2.65 percent in Jan. 2021. 

    But despite the lower rates, homebuyers on Long Island are still stymied by record high home prices, which mortgage brokers say is the biggest obstacle facing the housing market, especially for younger buyers just starting out. 

    The median price of closed single-family home sales in Nassau County in November was $840,000, which was $3,000 more than the October median price of $837,000 and 8.4 percent higher than the $775,000 median price recorded in Nov. 2024, according to numbers from OneKey MLS. 

    In Suffolk County, the median price of closed single-family home sales in November was an all-time high of $725,000, an increase of $24,000 from the previous month and 11.1 percent higher than the $652,500 median price of a year ago. 

    Housing industry observers say home prices are rising because the number of available homes for sale is so low. 

    There were 5,114 Long Island homes, including single-family, condos and co-ops, listed for sale with OneKey MLS at the end of November—2,159 in Nassau and 2,955 in Suffolk. That’s 669 fewer homes than were listed for sale the previous month, and 13.4 percent fewer than the 5,899 homes that were listed for sale at the end of Nov. 2024.   

    As a further illustration of the historically low inventory, when mortgage rates in Nov. 2008 matched the current rates, there were 23,367 Long Island homes listed for sale with MLS, four-and-a-half times as many as this past November. 

    Jesse Sasso, branch manager and loan officer at Contour Mortgage in Huntington, told LIBN last year that the mortgage rate isn’t impacting demand from prospective homebuyers, though prices certainly are.  

    “They’re way more concerned with the prices now. And I think that that’s going to have to come to a head,” Sasso said. “The inventory has got to increase. If the inventory doesn’t increase, it’s simple supply and demand. And if the availability doesn’t increase, then the values are going to continue to increase. People are just going to pull back from buying, regardless of the rates.” 

    Kevin Leatherman, owner-broker at Leatherman Homes in Rockville Centre, told LIBN last month that lower mortgage rates are a double-edged sword. 

    “The challenge is, when the mortgage rates go down, you’re going to have more competition,” he said, adding that a rate drop could precipitate a rise in inventory. “I think until you have a situation where the current mortgage rate is closer to the rate that somebody’s currently paying, the spread has to narrow in order to get more sellers into the market.” 


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    David Winzelberg

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  • How To Buy A House With Bad Credit | Bankrate

    How To Buy A House With Bad Credit | Bankrate

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    Key takeaways

    • You can get a mortgage with a credit score as low as 620, 580 or even 500, depending on the type of loan.
    • Some mortgage lenders offer bad credit loans with more flexible qualifying requirements but higher costs. Others offer free credit counseling to help you improve your score before applying for a loan.
    • While you might be eligible for a mortgage with a low credit score, you’ll pay a higher interest rate for the loan. That’s why it’s best to work on your credit prior to getting a mortgage.

    Your credit score is the first factor mortgage lenders consider when determining whether you’re eligible for a loan. In general, a good to excellent credit score translates to more loan options and a better mortgage interest rate. However, you might still be able to buy a house with a lower credit score. Here’s how.

    Can you buy a house with bad credit?

    Yes, you could buy a house with bad credit. There are several mortgage programs that allow for lower credit scores, including conventional (the most popular loan type) and FHA loans.

    The typical mortgage borrower, though, has very good credit. As of the first quarter of 2024, the median credit score for a mortgage borrower was 770, according to the Federal Reserve Bank of New York.

    Mortgage lenders reserve their best rates for borrowers with credit scores at 740 or higher — considered “very good” by FICO scoring standards.

    How do mortgage lenders evaluate credit?

    Lenders rely on data from the three main credit reporting bureaus, Equifax, Experian and TransUnion. Typically, your lender will look at the middle credit score of the three when considering you for a mortgage. In addition to your scores, your lender will look at your credit report, including total debt and any issues like defaults or late payments.

    What do mortgage lenders consider a low credit score?

    Your credit score isn’t the only factor in your mortgage approval odds, but it’s a key indicator of your risk as a borrower. Mortgage lenders most often use the FICO credit scoring model to assess creditworthiness. Here’s how those ratings work:

    Credit score range Rating
    Source: FICO
    Below 580 Poor
    580-669 Fair
    670-739 Good
    740-799 Very good
    800 or above Excellent

    Types of bad credit home loans

    Loan type Credit score minimum
    Conventional loan 620 or 660 depending on program
    FHA loan 580 (or 500 with a minimum 10 percent down payment)
    VA loan No official requirement, but typically 620
    USDA loan No official requirement, but typically 640

    Conventional loans

    Fannie Mae and Freddie Mac each back conventional loans with a lower minimum credit score: 620 and 660, respectively. Both of these loans require just 3 percent down.

    FHA loans

    The Federal Housing Administration (FHA) insures FHA loans, which allows mortgage lenders to accept a credit score as low as 580 with a 3.5 percent down payment, or 500 with a 10 percent down payment.

    VA loans

    If you’re a military member, a veteran or married to someone who has served in the armed forces, you could benefit from a VA loan backed by the U.S. Department of Veterans Affairs. You don’t have to meet a specific credit score minimum to qualify, although many lenders do require at least 620.

    USDA loans

    If you have a lower income and want to buy a home in a particular rural area, look into a USDA loan. While not a hard-and-fast rule, most USDA-approved lenders require a minimum credit score of just 640.

    How to get a mortgage with bad credit

    You can get a mortgage with a lower or bad credit score, but you’ll still need to financially prepare to make sure you get the best possible loan terms. Here are some steps to take:

    1. Check your credit report for errors

    If you’re wondering whether you can buy a house with bad credit, check your reports first. If you see a mistake or outdated item — generally seven years old, but sometimes longer for bankruptcies, liens and judgments — contact Equifax, Experian or TransUnion. Each credit bureau has a process for correcting errors and out-of-date information.

    2. Pay down or pay off debt

    When working toward buying a home with bad credit, try to pay down what you already owe. Lowering your debt load might not only boost your credit score, but also make you eligible for a bigger mortgage, thanks to a better debt-to-income (DTI) ratio.

    3. Shop around

    Every mortgage lender is different, and some offer lower rates and fees than others. If nothing else, research shows that getting multiple rate quotes can save you thousands over a 30-year mortgage. Banks aren’t the only spot to get a mortgage, either. There are also non-bank and online-only lenders, credit unions and other types of mortgage companies. Check out these different types of lenders to see where you get the best offer.

    4. Find a co-signer

    If you have bad credit, consider asking a family member or friend with better credit to co-sign your mortgage. This can help give your application a boost — but only if the co-signer is able and willing to take on the debt. (Note that co-signing is different from co-borrowing.)

    5. Avoid too-good-to-be-true loans

    If you see ads promising “guaranteed” approval for a mortgage regardless of credit, it’s a red flag. Under federal rules, a lender must verify the ability of a borrower to repay a mortgage, so there can’t be a “guarantee” unless that happens. Even if you get that guaranteed approval, it usually comes with excessive or inflated costs.

    6. Consider a rapid rescore

    Credit report changes can take time to go through the system, so improved scores might not show up in time for a mortgage application. In this case, you can try getting a rapid rescore through your lender. In this process, your lender submits proof to a credit agency that an applicant has made recent changes or updates to their account that are not yet reflected on their credit report. You’ll need to pay for this service, but the expense might be a worthwhile tradeoff to get a better interest rate.

    How much will a low credit score cost you?

    A poor credit score will primarily cost you in the way of a higher interest rate. Here’s an example assuming a 30-year conventional loan for $400,000:

    FICO score APR* Monthly payment Total interest paid
    *As of July 2024Source: myFICO loan savings calculator
    760-850 6.254% $2,464 $487,007
    700-759 6.476% $2,522 $507,906
    680-699 6.653% $2,569 $524,715
    660-679 6.867% $2,626 $545,208
    640-659 7.297% $2,741 $586,929
    620-639 7.843% $2,891 $640,903

    Bottom line

    It is possible to buy a house with bad credit, but you should take steps to improve your score, if possible, before applying for a mortgage.

    FAQ

    • It depends on the type of mortgage. Private mortgage insurers — which offer mortgage insurance for conventional loans, known as PMI — base their rates on credit score, among other factors. Generally, if you have a lower credit score, you’ll pay more for PMI.On the other hand, if you’re getting an FHA loan, your credit score won’t impact how much mortgage insurance you pay — those rates depend on the loan term, loan amount and size of your down payment.

    • Yes. Mortgage lenders take into account a variety of factors when pricing loans, including the borrower’s credit score. Generally, if you don’t have good credit, that’s a sign you’re a riskier borrower. To compensate for taking on that risk, your lender will charge you a higher interest rate.

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