Government Shutdown: Will the Shutdown affect my home loan?

Will the government shutdown affect my home loan? The short answer is yes.

Government Shutdown: Will the Shutdown affect my home loan

Government Shutdown: Will the Shutdown affect my home loan

The shutdown of two major government offices which are the Internal Revenue Service (IRS) and the Social Security Administration (SSA), are causing lending files to be put on hold. Congress has not been able to approve a continuing resolution, or budget, to fund government operations.

The IRS is closed! Sounds like great news and I normally would be doing flips. However, lenders are required to check IRS transcripts to verify income on the good folks applying for loans.  Buyers will now have to wait until the IRS is back and running. Furthermore, the longer the government shutdown – the longer the IRS will have to catch up. For example, let’s just say that Congress gets its act together and the shutdown ceases. Departments such as the IRS may be delayed weeks because of the backlog in files and requests. For everyday the shutdown goes on, may delay a homebuyer from getting a loan by several days or weeks. This is also true for refinancing.

To further complicate the mortgage process, the Social Security Administration is also shutdown. Lenders have to verify Social Security numbers. Some lenders have a solution this but it still poses a problem to a majority of buyers.

Popular in Arizona is a 100% loan program through the U.S. Department of Agriculture, known as the USDA loan. This program will also experience a delay unless the loan commitment has already been issued.

Most Americans may not see the effects of the Government shutdown right away, unless you are trying to get a home loan or happen to work for one of the government agencies that are closed. If the shutdown continues; however, be prepared for not only a slowdown in the housing market but an economic spiral downward.

I believe in being proactive and you can do this by contacting your local congressional representative, lender, and REALTOR to get more information.  Please continue to stay informed.

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Categories: Current Real Estate News

Author:Jim Red

Jim is the Designated Broker for Lund Realty located in Glendale, AZ. Specializing in helping people find and sell homes. His off time is spent with his family, dogs, servicing the community, and traveling. See more at www.JimRedSellsHomes.com

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