Wednesday, October 2, 2013

How Gov Shutdowns Impact Your Money

With The House's stay on negotiations the governments ability to move ahead with Fed efforts to fund it's departments and employees and service the general public is put on lockdown. If this shutdown proves lengthy it could impact home mortgage refinances as well, delaying rate locks and resulting in costly extension fees.

Following the housing crash lenders now check everything on a borrower's loan application. It has become standard to verify tax returns as a quality control measure. That means with a Fed shutdown and the IRS closed or staff reduced, processing forms will  take a while, including tax return transcripts. That said,  processing loan applications and getting to closing may take longer than usual. 

With The House's stay on negotiations the governments ability to move ahead with Fed efforts to fund it's departments and employees and service the general public is put on lockdown. If this shutdown proves lengthy it could impact home mortgage refinances as well, delaying rate locks and resulting in costly extension fees.

The federal shutdown will send more than 800,000 federal workers home without pay forcing these public servants to worry about whether they'll make their mortgage payments is also a concern. 

The stock market will also feel the pain of a long term shutdown. Fed cutbacks will limit critical financial services for millions and damage financial stability across the nation. Despite the shutdown the Stock market opened and trading remained steady Tuesday. 

Will The lockdown freeze home mortgage acquisition for home buyers? The Government gives some lenders "delegated authority"  to go on making FHA loans despite office reductions and lockdown laws. About 80 percent of FHA lenders will also be able to get FHA case numbers through the usual on-line service and the FHA will not be prevented from collecting insurance premiums from borrowers during a shutdown. That said, the FHA program may be able to weather a shutdown as long as it is a short term situation.

For a list of current mortgage rates, historic mortgage rates, charts and interest rate news visit Refinancial