Rates
Well rates have been stuck in a holding pattern due to the shutdown, not that rates are shut down, it is the bond traders are waiting for some sort of resolution.
So let’s give you all a heads up on what is going to happen to rates this month:
Option 1, government passes a continuing resolution and they increase the debt ceiling: Rates will then refocus back on economic news, which has been trending weaker lately, thus rates will go down slightly.
Option 2, government continues the shutdown, but they increase the debt ceiling. This will cause more people to be unemployed, thus dragging down corporate profits, increasing unemployment and reducing GDP. Rates will decrease, probably to 6 month lows, I don’t really foresee us going down to the low 3’s again.
Option 3, government continues the shutdown, and they default on the debt ceiling.
THIS WOULD CAUSE AN APOCALYPIC MELTDOWN THAT WOULD MAKE 2008 LOOK LIKE A SMALL BLIP ON THE SCREEN!!!! We are talking dogs and cats living together!
Here is what would happen:
1-The US Dollar, which is how the world trades, would fall, becoming worthless, think Mexican Peso during the worst of times.
2-US debt would sell off, i.e. bonds. Which is bad for rates, I don’t remember it, but think of interest rates in the 80’s, where rates were from 12% to 18%. And this would literally happen OVERNIGHT!
3-Stock market would CRASH, and CRASH HARD!
4-Riots in the streets, unemployment in the 20’s.
I am not being overly dramatic about this in any way.
Government Shutdown Update
Well believe it or not, the government shutdown hasn’t really affected us too much, here is a list of what is being affected
-USDA or Rural Development loans are shut down, the most dramatic affect from the shutdown, no RD loans can close.
-IRS transcripts, each file has to have a IRS transcript in it, which is order by a 4506T, this is an audit of tax returns to make sure the borrower didn’t forge anything.
For typical borrowers, there is no affect, because most of my lenders are waiving this.
BUT….
For anyone self-employed, have a Schedule C or E or a 2106, they will not be allowed to fund without a tax transcript.
VA: Any lender that does VA isn’t seeing a huge effect by the shutdown, unless they are not automated, then they are hosed.
Flood Certification: Automated = no problems, manual = Big problem, no one there to answer the phones.
Conventional loan, no issues at this time, except for the 4506T
FHA no issues, as of right now. But if for some reason they automated system goes down, there is no one there to fix it.
The Good news!
Ok, ran my first 2 clients through IHA’s new program, which allows the borrower to receive a 2% GIFT, that is right 2% gift of money from IHA.
2% FREE MONEY, totally amazing!