If by midnight tonight an agreement is not made regarding the funding the federal government, many vital services will be shut down. No, this is not the apocalypse! but yes some sectors will feel the aftershocks of such action. Where JohnHart is most concerned is with FHA financing.
In these hard times many people are finding themselves needing to purchase a residence and at the same time not having a large sum of money lying around to be used as a down payment. This is where FHA typically comes in. With a down payment of only around 3%, one can obtain a mortgage and purchase a property. While they may have to pay insurance monthly, guaranteeing they will not default, they are still given the ability to take the next step into home ownership.
If the fiscal budget is not agreed upon by midnight tonight, FHA will cease to allow lenders to assign new case numbers, which is essential to beginning the mortgage application process. Prospective homeowners who have already submitted an application and been assigned a case number should be unaffected by the possible shut down.
While FHA may be out of commission for a little while, VA, Fannie Mae, and Freddie Mac will continue business as usual. However, these other government affiliated mortgage backers may see setbacks as consumers who were looking to use tax return funds for their down payment, will be disgruntled to find out that the IRS will not be sending out refund checks until this is all settled.
If the past is any indication of what we can expect, FHA could be shut down for as little as three days to as many as 27 days. These truly are turbulent times, and we at JohnHart wish Congress well in their meeting and urge them to end this impasse… as soon as possible!