January 28, 2019
Headlines in the earliest part of 2019 about the government shutdown gave way at the end of the third full week to those discussing the interim re-opening of the government for three weeks so that negotiations on the federal budget may continue.
On Friday, January 5, 2019, the partial shutdown ended, bringing furloughed workers back on the job and ending the question of how long nearly one million American workers would have to do without a paycheck.
What does all this have to do with FHA mortgage loans?
Many wondered if the FHA would stop the home loan program during the partial shutdown, and while that did not happen, some aspects of the FHA mortgage program were affected including the Home Equity Conversion Mortgage program and certain aspsects of the FHA condo project approval process.
The real effect the government shutdown had on some? The uncertainty over when the next paycheck would be coming, casting doubts for any first-time home buyer or house hunter on the ability to get a loan approved during the shutdown.
Now that the government is fully open for business once more, it would seem those fears have been alleviated. But some point to the fact that the shutdown is only done for three weeks before it could happen again. That, of course, depends on whether or not politicians in Washington D.C. can come to an agreement on the federal budget.
What should first time home buyers do in the interim if they are federal workers concerned about how the shutdown has already or may in future affect their ability to financially qualify for a mortgage loan?
- Don’t panic: your participating FHA lender knows what is happening and that it is likely only temporary even if “temporary” means dragging on as long as the first shutdown did.
- Resist the urge to open new credit card accounts: A home buyer’s debt ratio is very important when it comes to loan approval. It is easy advice to give when saying “don’t spend more on your credit cards when you aren’t (or soon might not be) earning a paycheck, but if you can avoid doing this ahead of your mortgage loan application, it’s best to do so.
- Anticipate another shutdown: Assume that in three weeks when the current compromise expires and plan your budget accordingly. If you have the ability to hold off on a home loan application until after the three weeks have come and gone, it may be wise to consider doing so with the idea that you apply once you know your income won’t be threatened by another round of furloughs.
Talk to a participating FHA lender today about your options with or without another government shutdown in three weeks. This could be the best thing to do while uncertainty about what happens next still dominates the headlines.
Bruce Reichstein has spent over three decades as an experienced FHA and VA home loan mortgage banker and underwriter where he was responsible for funding “Billions” in government backed mortgage loans. He is the Managing Editor for FHANewsblog.com where he educates homeowners on the specific guidelines for obtaining FHA guaranteed home loans.
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