Should You Buy a House While the Government Is Shut Down?

The current government shutdown is the longest in U.S. history. All the uncertainty is making both homebuyers and sellers understandably nervous.

If you were thinking about buying a house, you don’t necessarily have to put those plans on hold. In fact, for some people, now might be a good time to shop for a house.

How the Shutdown Has Affected the Housing Market

The Federal Housing Administration and the Department of Veterans Affairs are still processing mortgage applications, although staffing shortages have caused delays. The Department of Agriculture is not issuing new loans while the government is shut down.

The shutdown has had less of an effect on conventional mortgages, but it has caused delays. Some buyers have been unable to get documents from the IRS or the Social Security Administration to support their loan applications.

Buyers are also hitting roadblocks because of insurance. If a house is in a flood zone, a buyer must obtain flood insurance before closing. The shutdown has stopped the National Flood Insurance Program from issuing new policies. In some places, homebuyers can buy flood insurance through private insurers. In other areas, that’s not an option.

Real estate agents are adding shutdown contingencies to contracts. Those terms protect buyers if they need extra time to close because of delays related to the shutdown.

Market conditions vary from one region to another. Economic uncertainty is higher in areas with large numbers of federal workers. Mortgage delays are more common in rural areas, where buyers can’t get USDA loans, and in places where buyers need flood insurance, but can’t get it.

Why It Might Be a Good Time to Look for a House

Many buyers who made offers before the government shutdown are stuck in limbo. If the shutdown drags on, they might be unable to close on new homes or might decide not to move forward. Houses that they were planning to buy will go back on the market. In addition, federal workers who have been furloughed might decide to sell their homes.

Those conditions can lead to a buyer’s market, with more houses for sale than people who are interested in buying them. That typically translates to lower prices for buyers. The uncertainty caused by the shutdown has also contributed to lower interest rates, which can benefit buyers.

Figure out What’s Right for You

The government shutdown has affected individuals and families in different ways, which means it’s more important than ever to get personalized advice from a professional. Your real estate agent can make recommendations based on your family’s circumstances and the local housing market.

Focus on What You Can Do

Even if you can’t buy a home right now, there are things you can do. For example, you can get preapproved for a mortgage and find out how much you can borrow, look at listings, and schedule viewings.

You can also educate yourself about the homebuying process. All too often, first-time buyers make mistakes that cost them money for years.

The First-Time Homebuyer Masterclass will walk you through each step in the process. You’ll learn how to get preapproved for a mortgage, how to choose the right house, and much more.

Your lender might cover the cost of the course. If it doesn’t, you’ll still gain peace of mind and save money in the long run. Sign up today.