Buying or Selling a Home? Be Prepared Through the Government Shutdown.

Today, I was on WSB radio speaking of the effects of the government shutdown on home buyers and sellers.  It is very important that you give yourself enough time to get through all of the possible hiccups that could happen. Here are the specifics:

1) Lower rates will help buyers- mortgage rates move with the direction of the economy. If banks and mortgage lenders think the economy is slowing because of a shutdown, interest rates could follow. Last week, they remained fairly steady- we will see what next week holds.

2) FHA loans will be affected – If you want to use a Federal Housing Administration (FHA) loan, you could be in trouble. Approved mortgages will certainly be slowed while the FHA is shut down, even as it provides other services to the public. This is because mortgage companies have to order case numbers that FHA puts on each home. They are still being processed- there are just a limited number of workers available.

3) I.R.S. documents out of reach – Another consequence of the U.S. government shutdown is the inability of mortgage firms to verify a borrower’s income via his or her U.S. tax returns. By law, any mortgage loan approval is subject to the review by the mortgage lender of at least one year’s worth of federal tax returns, and must be verified by the IRS through a 4506 Transcript. With IRS staffers at home, that process is stalled as tax agency workers would be unable to verify tax return documents. Some banks have decided to waive those requirements- you still have to sign that your claims are accurate. Check with the bank you are using to see where they stand on this.

All of these could effect the home purchasing process. As you can imagine, even if it gets up and running tomorrow, all of the functions could be backlogged. Many lenders are looking for various work arounds for their clients, but it is always better to be safe than sorry. If you are a buyer, have your buyer explain the circumstances to the listing agent, and request enough time.

For more information, visit my site at www.arianemcclure.com. I will be keeping it up to date with the most recent updates to this situation.