There may have been a time in your life when you had a financial crisis that prompted you to file for bankruptcy. Well, you must understand that incidents such as these occur for more New Yorkers than expected. But you may want to put this event behind you and have a fresh start. Your plan may entail moving to a new home, but you may be unsure whether you qualify for a mortgage. Read on to discover the chances of getting approved for a mortgage after filing for bankruptcy and how a seasoned New York City real estate attorney at Zimmet Law Group, P.C. can help make this happen.
How long does bankruptcy stay on my credit report?
Your Chapter 7 bankruptcy may stay on your credit report for up to 10 years from the date on which you filed. With a Chapter 13 bankruptcy, this may remain for up to seven years from your filing date. Nonetheless, it is safe to say that mortgage lenders do not like seeing a bankruptcy filing on a credit report.
What’s more, even when the time comes when you requalify for a mortgage, you may have difficulty obtaining a competitive mortgage rate; compared to an individual who places the same down payment and has the same amount of equity, but has no bankruptcy filing on their record. This is because a bankruptcy filing may drop your credit score by 200 points or more.
How can I get a mortgage after filing for bankruptcy?
Unfortunately, many major lenders and mortgage investors require that your bankruptcy be discharged or dismissed before submitting a mortgage application. With this, different types of lenders may enforce different types of waiting periods.
More specifically, before they even consider financing you, Federal Housing Administrative loans and Veteran Affairs loans may hold a waiting period of generally two years from the date on which your bankruptcy was discharged or dismissed.
When it comes to conventional loans (i.e., mortgage loans that are not backed by a government agency), there may be a waiting period of two years from the date on which your bankruptcy was discharged or four years from the date on which your bankruptcy was dismissed. And for jumbo loans (i.e., mortgage loans that exceed the conforming limits set by the Federal Housing Finance Agency), there is usually a waiting period of seven years.
It is worth mentioning that even if a lender considers financing you in less than two years, you must carefully read through the terms and conditions within your mortgage. This is so you are not blindsided by any hidden costs down the line.
This is all to say that you must take your mortgage application seriously. This starts with retaining the services of a competent New York City real estate attorney. Contact Zimmet Law Group, P.C. today.