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Justin Pritchard

Government Shutdown and Home Loans

By October 1, 2013

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With the government shutdown a reality, what happens if you're trying to get a mortgage?

In many cases, you'll be unaffected. Most lenders are private businesses, so they ultimately approve applications and do all of the paper-shuffling. However, you might get held up if your lender wants to verify your tax records with the IRS.

If you're getting a government-backed loan, you still might not notice the shutdown - as long as it doesn't last too long. Government agencies are still processing loan applications. FHA loans, the most popular government-run loans, will continue to move forward, but the FHA is using a reduced staff and things could get ugly if this drags on. USDA loans, on the other hand, are on hold for now.

Perhaps the biggest uncertainty for borrowers is a change in mortgage rates. Depending on how long the shutdown last and what kind of economic data is released in the meantime, interest rates might rise (of course they could also move down). If rates rise, you'll still have a rate that's low by historical standards - even if it's higher than what you were hoping for last week.

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