If you have been following along with our blogs for the past few months, you may remember our blog, “Can You Buy a Car after a Chapter 7 Bankruptcy?” where we discussed the possibility of buying a car after bankruptcy. Cars are usually very easy to buy again after bankruptcy (maybe not the new Lexus), but homes may not be as easy. Let’s take a look at some different circumstances when it comes to buying a new house after chapter 7 bankruptcy.
When looking to start a mortgage on a new home, it is important to look at the types of loans that are available. The first is a conventional loan, which usually rewards higher credit users with an absence of a mortgage insurance premium if the down payment is high enough. However, it is required to have a higher credit score to qualify for a conventional loan. This also mean that it will be harder to obtain a conventional loan after completing a bankruptcy. In most cases, it will take about 4 years to qualify for a conventional loan. As for a Chapter 13 Bankruptcy, it will only take about 2 years once discharged. Two to four years is a long time to be without a house, so let’s take a look at some other options.
The other popular loans are FHA and VA loans., which are a little more lenient compared to a conventional loan. VA loans are for veterans only, and FHA is commonly used by first time home buyers and is insured by the government. But both are much more lenient when it comes to credit scores and bankruptcy. It will usually take 1 - 2 years for people to qualify for these types of loans after the bankruptcy. Once they are discharged from a Chapter 13 bankruptcy, it may only take one year until someone is eligible.
These instances only pertain to strictly chapter 7 and chapter 13 bankruptcy, with no foreclosures that occurred during the bankruptcy. If someone was foreclosed on their home as well as bankrupt, the road to a new home will be much longer with both foreclosure and bankruptcy.
A bankruptcy can uproot someone’s life, but not all is lost. Filing for bankruptcy is sometimes the best option for a person, so let the Law Offices of Nicholas J Del Pizzo help you through these difficult times today!