Monday, January 21, 2019

Government shutdown and home loans for government employees

Hmm.  First, some context; most low down payment loans (and other types) require the buyer have some savings, called reserves, in the bank when the loan and purchase close.  This assures the lender, who basically owns the house because of the low down payment, some security should the buyers' circumstances change.  No one wants the low down buyers to lose their home because of a few months of unemployment, or to be thrown into a tailspin if the hot water heater and furnace happen to break at the same time.

Ironically, the government affiliated Fannie Mae and Freddie Mac loans have added in, for loans to government employees, required two months of full mortgage payment reserves, or whatever the automated underwriting program requires ; which ever is greater.  The concern is that the lengthening shutdown may affect buyers' ability to make payments. 

Home buyers with government jobs used to be considered rock solid borrowers as their employment was considered quite secure.

If you are a government employee in the process of buying, or know someone who is, be sure to check in with your lender to see if this change will affect your loan eligibility or closing costs.

If you have questions give me a call. And a shout out to Eric Newman at Guaranteed Rate for this info.

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