Home Purchase Affected by Government Shutdown

Government Shutdown Affects Conventional and Government Loans (scroll to the bottom of this message in the comment section for updated information since original post was published…some of this information may be incorrect now that more information has leaked)

Home buyers with a proactive mind, especially the ones using VA, USDA, and FHA mortgages as their loan program to buy, are likely shaking in their booties about how the government shut down Tuesday will effect their process…in reality, Conventional buyers and government loan buyers will be affected the same.  It is not as bad as you might think though, but I am sorry to say, I can not say that there will be no effect or change.

Government ShutdownGood vs Bad regarding Government Shut Down

Good-  the type of loan you are using is not important to what the effect will be.  So, regardless of whether you are using a government mortgage like FHA, USDA, or VA, or a conventional loan, the effect is the same.  Also, the government shut down does not bring the “death penalty” to your process.  Your loan will still close and you will still get your home. 

Bad- in the loan processing, lenders all have to send in a 4506-T (form that allows the lender to get transcripts from directly from the IRS that can be compared to the tax returns for accuracy) to order your tax return transcripts…the government shut down will affect the turnaround time for which they can get these back to us.  Normally, we can send them the 4506-T, and they get they get us the results back to us in 3-6 business days.  With this government shut down, expectations are that this service from the IRS will now take over a week or even weeks, plural.  :) 

What can you do to make sure your process goes through without a hitch?

  1. UH, the obvious, use me as your loan officer:)
  2. Make sure your loan officer or loan officer’s processor orders the 4506-T at the very beginning of the process
  3. Be sure that during the writing of the contract to your seller, you try to keep your closing date at least 25 days out from the day you execute the contract, and if you can make it work, extend that to 30 days for safety.

 

Comments

  1. says

    It saddens me that the government shutdown affects so many people in so many different ways they never could have imagined. It truly saddens me that the people least affected by it are the ones who made it happen.

  2. says

    Thank you for this very in-depth, thorough explanation of the government subsidy mortgage loan process and how the government shut down will affect that process. If I were in the market to purchase a new home, I’d certainly consider using your services.

  3. says

    I had not thought about how the government shutdown would affect the home buying process. Requesting information from the government always takes time. So, the extended time to get tax return information from the IRS probably won’t be a big surprise to most people.

  4. Irene S. says

    Okay. I know I don’t pay attention to the news much but I had not idea there was a government shut down. Thanks for the heads up!

  5. says

    I know it’s not good for those who are affected directly by the shutdown, ie government employees and consumers like yours that need them, but I hope it might show that we shouldn’t be giving all of our power to the government in the first place. There is definitely a role for them to play, and one where they shouldn’t.

  6. Kelly says

    Great information here.. Hopefully the government shutdown won’t last too long. Our government needs to get their act together and work for the people!

  7. says

    It is truly a selfish thing. The heads of our government, and I’m not speaking of just Obama, are dissappointing. I think that if the people ran this government like it was set up for, we would probably overhaul the heads in it right now like they do in a football program. When a football coaching staff isn’t winning and a new head coach comes in, typically the entire staff is fired, and the new person comes in with their own. I think that “the people” should be able to clean out what’s in there now and start over new. :)

  8. says

    I’m trying to leave all updates that come out about the government shut down as a comment to my original post. Right now, here are the issues and what to expect.
    1. ALL LOANS- the 4506 that must get processed by the IRS can not get processed right now, so those who do not already have their 4506′s ordered and back, those loans will not close until resolution of this issue. Word is, the investors are getting together and trying to figure out how to get around this issue and in weeks, if there is no resolution, they will work around the 4506 somehow.
    2. USDA- closed…they are not closing and funding or taking on new loans right now until the shut down is over

    Thanks,
    Brad Lynch
    YMGFL

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