What the Government Shutdown Means for Your Mortgage

What the Government Shutdown Means for Your Mortgage

The United States’ current partial government shutdown is the longest on record in the country’s history, with hundreds of thousands of federal employees being furloughed. While banks are still in operation during this time, the mortgage industry isn’t immune from the shutdown’s effects—and if you’re a federal employee, you may be feeling the sting of a loss of income.

Obtaining a New Loan

The government shutdown has affected a number of departments which are key in obtaining a home loan. The result: applying for a mortgage—an already stressful process—may become even more complicated.

FHA, USDA, and VA Loans

If you’re in the process of obtaining a loan through the Federal Housing Administration, you will likely encounter a delay in the underwriting of your loan. Depending on the length of the shutdown, your closing date might need to be extended as well.

While single-family loans are still being funded during the shutdown, other forms of loans have been halted. This means that if you are in the process of obtaining a reverse mortgage or Title I improvement loan through the FHA, you’re going to experience a delay.

The U.S. Department of Agriculture has also suspended approval of USDA loans during the government shutdown.

Although backed by the Department of Veterans Affairs, VA loans will still continue to be processed during the shutdown.

Conventional Loans

While the majority of mortgages are conventional loans which are not backed by the federal government, the shutdown can nevertheless cause a strain for those who are applying for a conventional loan. In many cases, lenders require information from the federal government in order to complete the underwriting process. This means that if your lender requires a 4506-T tax transcript, you can expect delays in your loan processing—although the IRS has resumed processing these transcripts, the department is experiencing a significant backlog.

Dealing with Your Current Mortgage

If you are a federal employee and have been furloughed, you have already learned a hard truth—your mortgage payment isn’t put on hold until the shutdown ends. The loss of income that you are experiencing can be crippling for your financial stability. If you’re having trouble making your mortgage payments during this time, it’s critical to be proactive and take action now. Contact your lender or loan servicer and explain the situation. Although not ideal, forbearance-a temporary suspension reduction of your mortgage payment—may be an option that your lender or servicer offers.

Experiencing Issues with Your Mortgage? Contact Us Today

If you’re a federal employee who is experiencing issues with your mortgage due to the partial government shutdown, the team of attorneys at the Law Office of Brian L. Boger are standing by to help you deal with your mortgage company. To speak with a member of our legal team about your issue, fill out an online contact form or call (803) 252-2880 today.



Top Reasons People Refinance a Mortgage

If you are saddled with a mortgage with an extremely high interest rate or terms which you are not comfortable with, refinancing your mortgage may be a way to escape the offending loan. People refinance home loans for a multitude of reasons, but several reasons are more common than others.

Common Reasons to Refinance a Mortgage

  • Lower interest rates: the most common reasons that homeowners refinance their mortgage is to lower the amount that they are paying in interest. If you purchased your home several decades ago, you might be facing interest rates of eight to ten percent. Current interest rates are much lower than they were twenty years ago, with the average interest rate in 2018 being 4.5%. With this difference in interest, homeowners can save thousands of dollars per year by refinancing their mortgage.
  • Convert to fixed-rate mortgage: Adjustable rate mortgages (ARMs) certainly have their advantages; namely, ARMs generally boast a very low interest rate in the first few years of the mortgage. If rates are on the rise, however, interest rates for adjustable rate mortgages may eventually far exceed fixed rate mortgages. If your interest rates have continued to increase during the periods of time in which your rate can change, you may want to consider refinancing to a fixed rate mortgage.
  • Get cash from your equity: if you have built up a significant amount of equity in your home, you may be able to get cash out of your home by refinancing your mortgage. Oftentimes, individuals do this to pay off debt or make renovations or repairs to their home.
  • Lower monthly payment: oftentimes, individuals experience circumstances in life which render them unable to make their monthly mortgage payment. In such circumstances, refinancing your loan to have a longer loan term may result in a decrease in your monthly payments. While this isn’t necessarily a “fix” to your problem, it can make your payment more manageable if you are in a financial bind.
  • Higher credit score: if your credit was subpar when you obtained your mortgage, you may be suffering the consequences in your interest rate. If your score has significantly increased since you first took out a mortgage, you may be able to save a significant amount of money by refinancing your mortgage at a lower interest rate.

Looking to Refinance? We Can Assist You with Your Closing

If you are refinancing your home and need assistance with your closing, the team of closing attorneys at the Boger Law Firm are standing by to assist you. Our attorneys have over forty years of combined experience conducting real estate closings, and are happy to help you with your closing as well. To learn more about the closing process, or to schedule the closing for your refinance today, fill out an online contact form or call (803) 252-2880 today.


The Do’s and Don’ts of Applying for a Mortgage

If you have decided to purchase a home and are applying for a mortgage, then there are several things that you should know about the mortgage process. In particular, there are several things that you should do—and absolutely shouldn’t do—in order to ensure that you don’t jeopardize your mortgage approval.

Mortgage Applications: Do’s and Don’ts

DO get pre-approved for a loan: A pre-approval will give you an estimate of how much your lender will loan you, and will inevitably have an impact on the price range of homes you tour.

DO try to pay off debt: if you have a high debt-to-income ratio, your credit score may suffer. Paying off or paying down the balance on credit cards, car loans, and other forms of debt can make your credit score improve significantly, which can help you get a lower interest rate on your mortgage.

DO use a reputable lender: a home is one of the most expensive purchases you will ever make. When choosing a lender for a mortgage, do your research; if the deal sounds too good to be true, then it probably is.

DO keep good records: your lender will probably require a lot of documentation such as paystubs, tax returns and a list of your current assets and accounts. Be sure that you are prepared to give this documentation to your lender.

DO keep in communication with your lender: even if you provide your lender with all requested documentation, he or she will probably have some questions for you. Keeping an open line of communication with your loan officer will make the process move more quickly.

DON’T miss a payment on any account: a thirty-day late payment can severely affect your credit score, which can compromise your chances of being approved for a mortgage.

DON’T shop for more than you can afford: the bottom line isn’t simply the sales price of your home. You will need to take into account the costs of homeowner’s insurance, property taxes, and, in some cases, private mortgage insurance. Be sure to speak with your lender about what you can and can’t afford.

DON’T open or close any credit cards: inquiries for credit card applications can negatively impact your score by several points. While this may not seem like a big deal, those several points lost from your credit score can bump you up to a higher interest rate.

DON’T make any unusual large cash deposits: a large sum of money suddenly appearing in your bank account can throw up red flags for your lender. If you absolutely have to make a large cash deposit, make sure to have a paper trail—keep a record of where the deposit came from and what it will be used for.

DON’T make any large purchases: regardless of how good the deal is at the time, a new car or furniture purchase can wait until after you have closed on your home. Large purchases can throw off your debt-to-income ratio to the point that your lender might not approve you for a loan.

DON’T quit or change jobs: a steady employment is critical to being approved for a mortgage. If you can help it, don’t switch or quit your job while you are waiting to close on your home. Your lender will require proof of income to approve you for a mortgage.

Purchasing a Home? We Can Help

If you are in the market to purchase a home, the Boger Law Firm is here to help you from contract to closing. To schedule your closing today, fill out an online contact form or call (803) 252-2880 today.