Saving up to buy a Long Island NY home might not be as much of a challenge as it used to be, now that the Federal Housing Finance Agency (FHFA) will allow some first-time homebuyers to make down payments of as little as 3 percent on Long Island NY mortgages.
Why Down Payments on Long Island NY Mortgages Are Going Lower
The goal is to make homeownership more accessible than it has been in a tight post-recession mortgage market. These low-down-payment loans apply to 30-year, fixed-rate Long Island NY mortgages guaranteed by Fannie Mae and Freddie Mac. The agency regulates Fannie and Freddie, which guarantee the majority of U.S. mortgages.
If you want to buy a Long Island NY home but don't have enough cash on hand for a down payment and closing costs, you might be able to qualify for an affordable home loan. Keep in mind lenders will require you to pay private mortgage insurance (PMI) if you pay less than 20 percent upfront, a cost homebuyers often overlook when determining how much they can pay.
One of the first things you'll want to look at before applying for any of the various types of Long Island NY mortgages is your credit score.
Credit Scores When Applying for Long Island NY Mortgages
There are a lot of different credit scores out there, and this has naturally led many consumers to ask: Which credt scores should I pay attention to, and what's my real credit score? People gravitate to the well-known FICO score, (FICO) by all accounts is the market leader in credit scores (meaning more banks use FICO scores than other scores). In fact, many refer to non-FICO scores as "FAKO" scores, but is that really an accurate assessment?
Most lenders have a baseline credit score by which they largely make their decision to approve or deny applicants for Long Island NY mortgages. The maximum credit score is 850 (though a score of 850 is rare, indeed. Only about 10% of applicants have a score over 800). Any score in the 700s or above is excellent and will get you a loan with the lowest interest rate. When you get into the 600s it starts getting dicey. A score of 680, for example, is still considered good, but when you get below 660, some lenders start saying, "No."
Most people don't realize they have more than one credit score, and just because you pay for your "Fico Score" doesn't necessarily mean you're seeing the same score a lender may be pulling and using to determine whether you qualify for any of the Long Island NY mortgages they may offer.
Your credit standing not only affects the mortgage rate you may qualify for, it also impacts how much you must pay in PMI. You can also get rid of PMI after you've built a certain amount of equity in your home, among other requirements, but it's on you to go through the process of removing PMI from your loan.
With the new directive from the FHFA, buying your first Long Island NY home may be more attainable, but the decision requires just as much careful thought as it would if you needed to put down 20 percent of the home's value to get a mortgage. Consider the overall impact on your life of buying a home, and make sure your credit is in good shape before applying for any of the many Long Island NY mortgages available from most area lenders.
Get more information about becoming a Long Island NY homebuyer and news affecting mortgage rates and qualifications in our section on Long Island NY Mortgage Info to your right under Long Island NY Real Estate Categories.
We post daily to Twitter, and also on our Facebook Page. We'd love you to check us out there too.