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.
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?
- UH, the obvious, use me as your loan officer.
- Make sure your loan officer or loan officer’s processor orders the 4506-T at the very beginning of the process
- 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.