With a U.S. Government shutdown looming, many Americans are asking, “How will this affect me?”
The answers are many, from the closure of National Parks to the potential delayed payment of military personnel. The effects of a massive shutdown don’t stop there, however. Should the U.S. Government not meet their midnight Friday deadline, the fallout could most certainly have repercussions on the U.S. Housing Market.
The 2 week government shutdown of 2013 resulted in the unpaid leave of many employees associated with IRS services that provide income and Social Security number verification. Because of this, lenders did not have access to information essential to the processing of mortgages.
“One of the biggest impacts to the mortgage market is that the ability to obtain a 4506 and Social Security Number Verification has been halted,” says Jason Auerbach, an LPO manager at New York city-based First Choice Bank/Lending. “The 4506 IRS Transcript is verification from the IRS that the income documentation, specifically tax returns, provided by a client match with what they filed.”
While absolute disruption is not expected, be prepared for delays with FHA and VA Loan Closings. And if you’re buying a home in a flood zone, beware that unless you’ve already obtained flood insurance, you will not be able to close due to the shutdown of FEMA.
While a government shutdown will not stop the housing market, it will certainly affect the speed at which mortgages are obtained and closings occur. Make sure your agent is prepared when placing your offer on the bidding table. Excalibur’s agents are fully aware of the potential consequences of a government shutdown and are prepared to make the strongest offer while keeping your best interests in mind.
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