Mortgages and Chapter 7: Getting back into the housing market

November 6, 2014 11:24 am Published by

After bankruptcy, how can you get a mortgage in New York? Interestingly, each kind of bankruptcy will affect you differently, and if you applied for bankruptcy protection during the U.S. recession, then you may be able to apply for a new mortgage now. The recession officially ended in 2009, and the mandatory time you had to wait to get a mortgage backed by either the Federal Housing Administration or Fannie Mae only lasts two to four years.

In 2010, the number of bankruptcies in the United States peaked. At that time, there were approximately 1.5 million Americans who had filed for protection. Some households chose to go through Chapter 7 liquidation bankruptcy. Those who did needed to wait four years after the elimination of their debts before they could reapply for a loan through Fannie Mae. Chapter 13 participants only had to wait two years.

Luckily, Federal Housing Administration loans had only a two-year wait for those who went through Chapter 7, and it had a one-year wait for Chapter 13 participants, allowing more people to get back into the housing market.

It’s estimated that it could take up to five years for those who went through bankruptcy to get a credit score good enough to be competitive in the loan market. That means that having an established financial record is vital after bankruptcy to show that you can afford to pay and keep up your payments for your new home.

If you have questions about your bankruptcy and the rules that go along with it, make sure to speak with someone who knows the background of your case. You may be able to start fresh and get a good rate on your new home with the right help.

Source: The New York Times, “Mortgages After Bankruptcy” Lisa Prevost, Oct. 30, 2014

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