I have received a few questions from clients regarding how the current shutdown could affect the sale of their home and thought it would be a great topic for a post. As of right now, a few days in, we don’t expect to see too much disruption of sales, but as it drags on for weeks or possibly months the situation becomes more difficult.
If a buyer is taking out a mortgage, the chances are the federal government is involved in some way throughout the process. Many lenders require an IRS form 4506-T, which verifies the SSN and income of the applicant. With the IRS shut down, significant delays are expected in this process. Another consideration is which type of loan you are receiving, because FHA and USDA loans may be impacted with the shutdown but Fannie Mae and Freddy Mac are still operating as usual.
Even if this is resolved today, the backlog from this last week is going to take some time to get through. Restarting the government takes time, and when the federal employees come back to work they not only have current applications to process, they have an ever-growing batch of shutdown documents to get through. Every day that the shutdown goes on, they delay will effectively double.
What are the effects for you? Well if you are selling, be aware that there could be a possible delay in closing. This is not a given, but it would be best to check with your agent about the status of the buyer’s financing and what your options are. If you are buying, you should be checking in with your lender to see what kind of delays they are expecting and relaying that info to your agent and the sellers.
What about if you are not buying or selling? Well this has little effect on your home, unless you are in the process of refinancing. Then of course the above delays may apply, but will probably not affect the process in the long run. Now of course, if we hit the debt ceiling, it may be another story…
Please contact me if you have any questions or need help navigating this uncertain time.