By now, many have been touched by the credit crisis. And it's not over yet. But financial experts say there are ways to survive -- and thrive -- in this real estate market.

Renters who want to buy, for instance, may find a great deal on their first home. Those looking to trade up? Don't even think of buying until your house is in contract. Downsizers should make sure to price their home right. Second home buyers and investors: Don't overpay. And for those struggling -- experts advise a number of strategies, such as contacting your lender or a counseling agency for help.

In Baldwin, the Fowler family wants to trade up to a bigger home: From front to back: Regan, 2; Gillian, 7; Evan, 9, Joy and Gregg Fowler, holding Morgan, age 19 months. (Newsday / Jim Peppler, Newsday Staff / November 28, 2007)

What follows is a look at how the changing housing market is affecting those who want to buy homes on Long Island and those who want to sell them, as well as those who are facing steep jumps in their adjustable-rate mortgage payments. And experts offer tips for each situation.

Home ownership delayed

When Jennifer Wallace turned 35 last year, she vowed she would own a house by age 40. But now that her landlord is raising the rent on her three-bedroom apartment in Bedford-Stuyvesant, Wallace says she is hoping to buy a house in Nassau County for herself and her two children next summer.

Over the past year she has worked to improve her credit profile by paying down debt. At this point, Wallace says, she doesn't know what her credit score is because she's afraid to check it. But she plans to get a credit report once she clears up a few more bills.

A case worker at Elmhurst Hospital by day and a bartender by night, Wallace has set aside $8,500 for a down payment. And she says she is planning to take a first-time home buyers class through her union to prepare for such a big responsibility.

Her goal is to sock away another $1,500 and start looking at homes in the $300,000 to $400,000 range in Baldwin, Freeport, Hempstead, Uniondale and other communities.

Wallace's agent, Daphnee Doresca of Century 21 Laffey Associates in Westbury, told her that to obtain a mortgage she'd need to save more money. These days, with delinquency and default rates soaring, the banks want larger down payments and greater reserves in the bank. To deal with this higher bar, Doresca suggested Wallace look into a first-time home buyers program that helps with closing costs or down payments.

The turmoil in the market has dismayed Wallace, who finds the new requirements very intimidating.

"It's discouraged me having to have a stronger credit score and larger down payment," says Wallace, who grew up in a house in Brentwood and in Central Islip and wants her young daughter to have the same lifestyle. "It's gotten me a lot more nervous than before."

Doresca says she finds that more of her clients -- especially first-time home buyers -- are having a tough time obtaining mortgages. Several lenders, including those who catered to subprime borrowers, with less-than-perfect credit, have gone out of business. Others have eliminated loans that offered super-low introductory interest rates or no down payments.

Before the summer, Doresca says, she could get a loan for "just about anybody who came to me." Now, one in five of her customers is running into trouble.

That's why she counsels those interested in buying a home to see what kind of financing they can get before they start looking. Those who got their mortgage pre-approvals months ago should check to make sure they still qualify and that the programs still exist. That way, they know they can follow through when they put down an offer to buy a home. "They have to be pre-qualified," Doresca says. "It's not the same story as six months ago."

In the last two or three weeks, though, some banks have started offering new mortgage programs -- requiring full income documentation -- in certain lower-income neighborhoods to spur home buying, she says.

One development that will help Wallace and others looking to own instead of rent is that home prices have fallen in recent months. Real estate brokers around the Island report slides of up to 10 percent in many communities. In some places it's even greater than that.

"The drop in prices has put a lot of otherwise on-the-fence buyers in the market," says Lynn Law, director of education and counseling at the Hauppauge-based Long Island Housing Partnership, which runs a first-time home buyers program. "Homes that two years ago would have been out of their reach are now affordable."

As far as Johnny Matos is concerned, the prices haven't come down enough. The Levittown native recently sold his home in Orlando, Fla., and moved back to Long Island after getting married. He and his wife, Mirtalita, a high school language department chairwoman, are now renting a one-bedroom apartment in a Wantagh house.

For the time being, Matos says, he thinks it's more economical to rent than to own. He is paying $850 a month but figures he would likely pay about $4,000 a month in mortgage payments, taxes and insurance if they bought a home. Still, he expects to purchase a place in the $400,000 to $550,000 range in the next year because his wife wants to start a family. He says he's hoping prices will drop more by then.

"In the last year nothing has enticed me to buy," says Matos, 48, who owns a kitchen cabinet business. "For me, it's just waiting until somebody gets desperate."

Copyright © 2007, Newsday Inc.