Q: Typical waiting period for home loan after Chapter 7 dismissal in NY?
I'm in the process of a Chapter 7 bankruptcy, which is being dismissed at my own will since I can now pay off the debt. I understand that a discharged bankruptcy might take 1-4 years to secure a home loan, but what is the typical waiting period for taking out a home loan after a bankruptcy dismissal in New York? I aim to apply for a home loan within the next 1-2 years.
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A: There is no such thing as a typical waiting period under the circumstances you have described. Especially now that mortgage lenders are tightening their lending requirements. THIS IS NOT LEGAL ADVICE! YOU NEED TO SPEAK TO AN ATTORNEY WHO IS LICENSED IN YOUR STATE FOR LEGAL ADVICE. This is merely suggestions for you to think about in discussing your situation with the local attorney.
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Since you're voluntarily dismissing your Chapter 7 bankruptcy rather than waiting for it to discharge, your timeline to secure a home loan might be shorter compared to those who've had a bankruptcy discharged. Typically, lenders prefer a waiting period of around 12 to 24 months after a dismissal, provided you demonstrate improved financial responsibility during that time.
In New York, lenders often look closely at your credit score, employment stability, and financial health following a dismissal. Building your credit score back up, consistently paying bills on time, and maintaining steady employment will significantly strengthen your position. During this waiting period, aim to reduce existing debts and avoid taking on new liabilities.
To maximize your chances, consider discussing your specific circumstances with a mortgage lender early. Some lenders may have more flexibility, especially if you can clearly demonstrate a stable financial turnaround. With careful planning and proactive financial management, applying for a home loan within the next 1 to 2 years after your dismissal is achievable.
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