Government shutdown may affect homebuyers, those seeking refinancing

Buying a home? Gov't shutdown may slow you down
October 1, 2013 8:43:31 PM PDT
The government shutdown could have far reaching effects for some people trying to buy a house or even refinance their current mortgages.

You can still apply for a home loan despite the government shut down; however, if you are getting a loan backed by the federal government, you cannot get two important pieces of information right now, and if the shutdown continues, it could bring the home loan process to a grinding halt.

One Inner Loop condo we found has only been on the market a few days and Houston Realtor Margaret Tsanias expects an offer at any moment. The government shutdown, she says, is not shutting down the Houston real estate market, but it is making some people nervous.

"There were a few buyers that I talked to today that said, that were curious as to what would happen," Tsanias said.

Tsanias adds the biggest impact will likely be on homebuyers who rely on government-backed loans to get mortgages. Those loan application are still being accepted, but the shutdown has stopped one important part of the process.

"Verifying tax returns, the IRS is not going to do that anymore; so as long as they are shut down, we cannot verify the tax returns the customer gave us," said Marc Elliot with Core Lending.

Elliot adds verifying Social Security numbers has stopped too. Elliot says those also looking to refinance will have to wait if the verification process does not restart soon.

"I have a customer right now who is actually refinancing his house and we are waiting for his verification from the IRS and have been for 2 weeks," Elliot said.

Right now, most believe the shutdown will be short lived, and that's good news, according to Dr. John Story with the University of St. Thomas's school of business.

"In the long run, as long as this does not go on too long we'll be fine," Story said.

Another consideration, interest rates. Delaying a loan could make borrowers lose out if the interest rate goes up, but the longest shut down only lasted 21 days and interest rates did not fluctuate much during that time.

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