SPRINGFIELD, Mass. (wggb) – If the government was to shut down at 12:01 tonight, among the services that would be affected are federal loans. FHA and VA mortgage loans, which account for 30% of home mortgages will not be underwritten during a shutdown. So how will that impact buyers and sellers?
Buying or selling your home is already a stressful process. Unfortunately for those currently in the market, it’s about to get a little messy too. And even the banks aren’t sure exactly how messy it may be.
“Nobody really knows what the impact will be yet. We still haven’t heard a lot of information from the various entities on how this is going to affect our business,” said Jim Sherbo, Senior Vice President of Consumer Lending at PeoplesBank.
FHA loans have been very attractive to first time home buyers over the last 3-5 years because of the low down payment. If those first time home buyers can’t proceed, then the people they are trying to buy from can’t move on either, that ripple effect impacts the entire industry.
“A prolonged shutdown could have could have an impact on the amount of closings and then the amount of time that you are on the market for,” explained Brian Sears, partner at Sears Realty.
And what about those buyers currently having a loan processed?
” We are working on getting all of that paperwork done, that we’ve been doing that for the last couple of days,” says Sherbo.
The last government shut down happened in the mid 90′s so most first time home buyers and even real estate professionals wouldn’t remember it. Brian has some advice for them. “The important thing, always always always is communication. Keep that communication open with your Realtor, with your loan officer. Make sure that your ahead of the game, that you have a contingency plan in place, be ready and you’ll be fine.”
In Massachusetts, buyers can also use the MassHousing loan, which offers similar benefits to the FHA loans with affordable and fixed interest rates as well as low down payments.