How the Government Shutdown is Affecting Real Estate

Are you applying for a mortgage?

Have you been considering selling your home?

The government has shut down and now we are all looking at how that affects us. Much of the shutdown is affecting us in ways we don’t always notice, like the White House website with the warning, “Because Congress did not fulfill its responsibility to pass a budget, much of the federal government is shut down.” Other parts of the shutdown that you wouldn’t think mattered, like the IRS being reduced could actually affect you the most.

Today, we are going to share how this shutdown might affect you, either as a home buyer or as someone who is interested in selling their home.

Why The IRS Shutting Down is Bad For Mortgages.

Buying a home is a big process even with the government up and running. For mortgages that are backed by Freddie Mac or Fannie May, the IRS being reduced is bad news. Banks use the IRS to verify income information. That income information is what helps home buyers close on their mortgages. Without that information, Freddie and Fannie may not be able to approve mortgages.

According to an article on CNNMoney, even Wells Fargo will not be able to complete any new applications until after the shutdown is over and the home buyers’ income can be verified.

Don’t worry. If you have found your dream home, there are still banks that are continuing to lend money during the shutdown. Those banks that are continuing to lend will sell the mortgages to Fannie or Freddie after the shutdown is over and when the buyers’ income can be verified.

Government-Backed Mortgages Are Still Available

While FHA has 96% of their staff on furlough, they have promised to continue to process loans. That is great news for anyone looking to buy or sell a home.

CNNMoney has reported that FHA, the Veteran’s Administration and the United States Department of Agriculture made up about 45% of backed mortgages in 2012. FHA alone insures 60,000 loans a month.

Mortgage Rates Dropping

We have one last bit of good news to share. Mortgage rates have dropped, again. At the beginning of last week the average rate according to CNNMoney was about at 4.32%, but by the end of last week, mortgage rates had dropped to 4.22%. Now .10% may not actually seem that important, but when you’re buying a $350,000 that .10% will make all the difference.

Just because the government has shut down doesn’t mean that you cannot buy your dream home or sell the home that your family is currently growing out of. Make sure to have an experienced realtor on your side that is familiar with the shutdown. That experienced realtor can help you navigate the waters of buying or selling your home. 

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