With the housing market already struggling, the federal government shutdown is no relief. President Donald Trump shut the federal government down in order to keep pushing for five billion dollars to fund his idea for the border wall. The shutdown could delay mortgage closings and may negatively impact the real estate market in the long run, the longer the shutdown takes place. According to the President, it may be weeks, months, or years.
Delays in the ability of borrowers to get a loan
There have been some delays in the ability of borrowers to get a loan for a mortgage. While the majority of loan companies are private and non-government funded, there are agencies and programs designed to help individuals who cannot afford a private company. For example, government agencies like the Federal Housing Administration have shown the significance of signs of delay. The Federal housing Administration assists lower-income people, as it offers as little as 3.5% down for those who do not have a strong credit score. The program has aided thousands of people nationally but currently is being delayed processing due to the shutdown.
Buyer afraid to go through with the purchase
The government shutdown has not only affected real estate by government agencies but has increased doubts in buyers. Currently, according to Fox Business, 25% of shutdown-related complications was a buyer afraid to go through with the purchase due to confusion and uncertainty with the government. While the government doesn’t have anything to do with our decisions in buying homes, the uncertainty of the governments’ situation can tense people up.
A closing delay from a USDA loan was reported at 17%
There are other factors that affect buyers which include a closing delay from a USDA loan and delayed IRS income verification. A closing delay from a USDA loan was reported at 17%. Delayed IRS income verification affects everyone, especially buyers waiting on a tax refund or paperwork. About 13% reported a delay due to IRS income verification.