Buying a house after bankruptcy in NY often comes with many questions. You may be wondering if getting a mortgage after Chapter 7 in New York is even possible or whether or not this will come with financial loopholes.
At Grady BK, PLLC, we strive to provide our Upstate New York clients with the one-on-one legal attention they need as they navigate the entire bankruptcy process, start to finish. We understand that bankruptcy comes with a lot of uncertainty, which is why we help to simplify the process so that you can proceed with confidence. In this article, we will discuss whether or not you can buy a house after bankruptcy in NY, and what the process looks like.
How Long You Must Wait to Qualify for a Mortgage After Bankruptcy?
Getting a home loan post-bankruptcy in Upstate NY is a common topic that comes up among those going through the bankruptcy process. Although you may be filing for bankruptcy right now, you may hope to purchase a home in the future. And the good news is that buying a house after bankruptcy in NY is possible.
How long you have to wait after bankruptcy to qualify for a mortgage often depends on several factors. The main deciding factor being the type of bankruptcy you filed for.
For Chapter 7 bankruptcy, you can rebuild your credit and obtain a normal interest rate mortgage 2 years after your bankruptcy case has closed. On the other hand, for Chapter 13 bankruptcy, you can apply for a loan (assuming you have worked at rebuilding your credit) 2 years after the bankruptcy has been filed; even when you are still in a bankruptcy.
It’s also worth mentioning that those who are going through Chapter 13 bankruptcy can apply for a loan before their repayment plan is completed. However, to qualify for this, you need court approval before you can close on our new home.
Types of Loans Available Post-Bankruptcy
Another aspect of bankruptcy and home ownership in NY that you should consider is the type of loan you can apply for. Generally speaking, those who have gone through bankruptcy may find their options to be somewhat limited. Also, the type of loan you apply for will often dictate how long you have to wait post-bankruptcy.
- FHA loans
- USDA loans
- VA loans
- Conventional mortgages
The timeline for each type of mortgage option can vary depending on the situation and is also subject to change year to year. However, the general wait time for each of these mortgage options is 2 years after filing.
Most people find FHA loans to be more forgiving, allowing you to apply for a mortgage much sooner after bankruptcy.
To get a more accurate idea of the wait time you will be subject to, you should hire a bankruptcy attorney in Upstate New York.
Tips for Getting a Mortgage Post-Bankruptcy
If you want to apply for an FHA loan after bankruptcy or another type of mortgage, you need to plan ahead. Understanding what your options are and preparing will help you to have a much better chance of successfully obtaining a loan post-bankruptcy.
Here are some tips for how you can prepare ahead of time:
- Decide on the type of loan and understand the waiting period.
- Begin rebuilding your credit in advance (we will give you information on how to start rebuilding your credit).
- Save for a substantial down payment.
- Write a hardship letter explaining your story and the steps you have taken post-bankruptcy.
Steps to Rebuild Credit After Bankruptcy
An immediate step you need to take when going through bankruptcy is to start rebuilding your credit. Although this can feel like a daunting task at first, it only takes a few steps and some patience.
- Future payments: Your top priority after bankruptcy needs to be maintaining all of your financial obligations. Making your monthly payments on time will have a very positive and long-lasting impact on your credit.
- Start saving: After bankruptcy, most people have to follow a strict budget, but you should still prioritize saving. Even saving as little as $10 a week will help you prepare for unexpected expenses that may come up in the future.
- Use credit responsibly: Later on, once you have a firmer grasp on your finances, you can take the additional step of applying for new credit. Doing so will help you to rebuild your credit by showing responsible financial habits. Keep in mind that your credit options will probably be limited, and you should only take this step if you know without a doubt that you can manage the payments.
FAQ
Can I buy a house 2 years after bankruptcy in New York?
Yes. However, this will depend on the type of loan you apply for and whether you have worked at rebuilding your credit post bankruptcy filing.
Will bankruptcy hurt my ability to get a low-interest mortgage?
It isn’t uncommon for those who have gone through bankruptcy to struggle to get a low-interest rate mortgage before the 2 year rebuilding period post bankruptcy. But by rebuilding your credit, choosing the right lender, and saving for a substantial down payment, you can usually get a relatively fair interest rate.
Upstate New York’s Top Compassionate Bankruptcy Attorney
Going through the process of rebuilding credit after bankruptcy and applying for a mortgage can feel very difficult, especially if you aren’t sure what your options are. At Grady BK, PLLC, we can provide clarity to this process, helping you to better understand what your options are and what is the best fit for your goals. We will work with you one-on-one so that you never feel like you are going through this process alone.
At Grady BK, PLLC, we treat each of our clients as though they were our only client, guaranteeing personalized representation. Whether you have questions or simply need support, we are here every step of the way.
Contact us today at 315-299-9005 to discuss your situation with a bankruptcy attorney in Upstate New York. Our team at Grady BK, PLLC, is always available to address any questions or concerns you may have.
