USDA Streamline Refinance

If you have previously obtained a loan from the United States Department of Agriculture (USDA), you are aware of the advantages this program offers to low- to medium-income homebuyers. With zero down payment and flexible eligibility requirements, the USDA loan provides opportunities for buyers who might not otherwise qualify. For current USDA loan borrowers who wish to lower their interest rate, the USDA offers three favorable refinancing options: USDA streamline refinance, USDA streamline-assist, and non-streamlined refinance.

USDA Streamline Refinance

Introduced in 2012, it is designed to be similar to successful streamline programs like the VA Interest Rate Reduction Refinance Loan. Through this program, homeowners who have maintained their USDA loan for the past 12 months may be eligible to refinance without a new appraisal and have the option to add or remove borrowers from the note.

Eligibility:

To begin the refinancing process, certain requirements must be met:

1. The mortgage to be refinanced must already be a USDA loan (Guaranteed or Direct).
2. The mortgage must have been current for the 180 days preceding the refinance request.
3. The existing loan must have closed 12 months prior to the request.
4. The homebuyer must meet the USDA’s debt-to-income ratio and credit requirements.
5. The maximum loan amount should not exceed the original loan amount at the time of purchase.

It’s important to note that cash cannot be taken out in a USDA streamline refinance, but the guarantee fee can be rolled into the final loan amount.

USDA Streamline-Assist Refinance

Considered the most favorable USDA refinance option. It does not require a new appraisal, credit checks, or calculations of debt-to-income ratios. Additionally, borrowers with little or no equity in their homes may apply.

Eligibility:

The requirements for the USDA streamline-assist refinance are similar to the streamline option, with a few additional details:

1. The refinance must result in a reduction of $50 or more in the borrower’s monthly payment.
2. The existing loan must have been current for the 12 months prior to the refinance request.
3. Borrowers refinancing a USDA direct loan will need a new appraisal.
4. Borrowers can be added to the note but not removed.

Considering a refinance? Speak to a specialist who can guide you through the process.

Non-Streamline Refinance

The USDA also offers a non-streamline refinance option, which is similar to the streamline option but requires a new appraisal. Borrowers might choose this option to avoid the $50 payment reduction requirement for the streamline-assist program or to receive an updated appraisal on their homes.

Please note that by refinancing your existing loan, your total finance charges may be higher over the life of the loan.

Remember to reach out to a USDA lender who can assist you with your refinance needs.