Well....It's Official! The Federal Government is shut down today (October 1, 2013). The last time we had a government shut down was 17 years ago, and the shut down lasted 21 days. Want to know how this will affect the housing market? Read more below:
What causes a shutdown? Under the Constitution, Congress must pass laws to spend money. If Congress can't agree on a spending bill — or if, in the case of the Clinton-era shutdowns, the president vetoes it — the government does not have the legal authority to spend money.
When would the shutdown end? Immediately after the president signs a spending bill. This could happen at any time. Since 1977 we have had 17 governement shut downs and many of them last only a few days, however the most recent time it happened, it lasted for 3 weeks. As a practical matter, it could be noon the following day before most government offices that were shut down would reopen their doors.
HOUSING/MORTGAGE SPECIFIC INFORMATION:
Can I still get a federally backed loan? Maybe not. "Federal loans for rural communities, small business owners, families buying a home will be frozen," President Obama said Friday. This would mean all USDA financing loans will be halted today.
Does that mean I can't get an FHA mortgage? No. The Federal Housing Administration says it "will endorse new loans under current multi-year appropriation authority in order to support the health and stability of the U.S. mortgage market." This means that if your FHA mortgage is already in-process, it is possible that you will not see any noticable delay. However, if you are just starting the process of applying for a mortgage you will want to confirm things with your mortgage broker.
Does that mean I can't get a VA mortgage? No. The Department of Veterans Affairs says loans are funded via user fees and should continue. However, during the last shutdown, "loan Guaranty certificates of eligibility and certificates of reasonable value were delayed."
If I'm getting a Conventional mortgage, should I expect no delays at all? Actually, yes there could be a delay. Regardless of what type of loan you are getting, the mortgage company will be asking the IRS for a transcript of your previous years tax returns. If the lender is unable to obtain your tax records, they may not be able to complete your loan - regardless of what kind of loan you are getting.
Each home buyer's situation will be unique, as there are many factors that will apply regarding the feasibility of each loan. If you are in the process of buying or selling a home at this time, it is highly recommended that you contact your Realtor or your Lender to confirm how this will affect your specific situation.
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