ANCHORAGE (KTUU) - Alaska home buyers and sellers beware, the government shutdown could likely impact your home purchase or sale.
According to Anchorage Associate Loan Originator Amy Washington (NMLS #199748) people in all corners of the state, from Alaskans in rural areas to furloughed government workers in cities, will have trouble securing federal home-buyers loans.
Washington listed three different federal home loan programs that are impacting potential home buyers and sellers in Alaska:
- Housing and Urban Development Indian Home Loan Guarantee Program (Section 184),
- United States Department of Agriculture Rural Development Home Loan Guarantee,
- Federal Housing Authority home loan programs.
Each program comes with different benefits:
- The HUD Section 184 Program offers home mortgage loans specifically for American Indian and Alaska Native Families. It includes a low down payment of 2.25 percent and a low annual premium in place of a monthly fee,
- Loans through the Federal Housing Authority offer a 3.5 percent down payment, easy credit qualifying, and are more flexible to the shutdown than the previous two.
Loans through HUD need federally approved case numbers to order home appraisals, as well as cohort numbers to close the loans. So, if you already started the loan application and have a case number and appraisal, the government shutdown prevents the closure of the loan without a cohort number.
This has repercussions for both buyers and sellers in Alaska. The buyer can't move forward with securing funding for their new dream home, and the seller is forced to either wait out the shutdown or place the house back on the market.
Loans through USDA RD can't close without a conditional commitment from the department, which is also closed due to the shutdown.
Washington says FHA loans are the only federal home loans that her company, Primelending (NMLS #13649) have been able to close since the shutdown began. She says these can function as last-ditch opportunities for Alaska Native and rural residents tied up in a loan agreement on a home that can't get federal approval. They can opt to use the FHA loans in order to close the deal on the home rather than wait out the uncertain end to the government shutdown.
But there's a catch, Washington says, for furloughed federal employees considering using FHA loans to buy homes.
“There can be issues with verification of employment with a government employee," Washington said. "We have to confirm that yes, they are on furlough. Yes, as soon as the government shutdown is over that they intend to immediately return to work."
"In instances where we can’t get any information, it’s on a case-by-case basis if the loan is going to close or not.”
If the shutdown continues indefinitely, Washington says the trickle-down effects of these home loan restrictions could eventually impact the state economy, as fewer people are buying and sellers struggle to decide whether to wait for the buyers' loan to be approved, or put the home back on the market.
“It’s a hindrance on the seller if the buyer has to back out, put the home back on the market, and start that process all over again," Washington said. "Especially if they’re looking to purchase a home and they’re already in contract.”
A big concern for people who qualified for some of these loans before the shutdown but never received the federal stamp of approval -- interest rates could go up; loan guidelines could change. They may miss their shot at their affordable dream home while waiting for Washington to wake up.