Government shutdown affecting home loans, mortgages
(WOLF) -- While federal workers are bearing most of the brunt of the government shutdown, other people are also beginning to feel its effects.
Some hoping to buy new homes are having trouble securing loans.
“Right now, our USDA loans are the only loans that we cannot close on. The U.S. Department of Agriculture is being affected by the government shut down," Lori Robinson, a loan production partner with Benchmark Mortgage, said.
USDA loans are a zero-down payment mortgage option for low-income home buyers in rural and suburban areas.
Because those loans are in limbo, buyers could potentially be at risk for losing out on their dream homes, but it doesn’t have to turn out that way.
“With everything going on with the government, I would be hard-pressed to find a seller that would not be sympathetic to the fact that its not a borrower’s fault that they cannot close on this particular type of product," Robinson said.
Staff at Benchmark Mortgage in Wilkes-Barre says the next step for buyers would be to try applying for a FHA or VA loan.
Both are backed by the federal government, but unlike USDA loans, they’re still being processed.
“Currently FHA/VA will be able to issue over 100,000 loans per month -- process 100,000 loans per month, that will eventually begin to slow down because of reduced staff, and that starts to affect everyone," Larry Dellegrotto, the president of the Luzerne County Association of Realtors, said.
Real estate experts say if the shutdown stretches on for much longer and more loan seekers are turned away, it could have an adverse effect on the industry as a whole.
“When more and more buyers drop out of the market, actually more and more sellers start to drop out of the market. Knowing they can’t sell their homes they’ll hold on until a later date. So it starts to affect everybody, the slowdown affects everybody," Dellegrotto said.