North Carolina homeowners that have a USDA home loan, USDA has a little known, special refinance product called the USDA Pilot Refinance Program which is for borrowers that currently have a USDA guaranteed loan and are looking to lower their rate and payment through a refinance even with equity not required. This USDA program allows for a borrower to refinance without an appraisal through a streamline process for a lower monthly payment. Besides not requiring an appraisal on the Pilot Program, another strength is that the closing costs can be included in the new loan so that the borrower brings little or no money to closing. Our team is very experienced in this USDA program and can speak to you in detail about the benefits as well as seeing if you qualify for the Pilot Program.
With rates as low as they are right now, borrowers that obtained a USDA Rural Development mortgage loan during the 2nd half of 2013 or in 2014 could benefit from a streamline refinance through USDA without an appraisal. There are also other options that we can review for your scenario as well in case something else could work better.
A sampling of the requirements or restrictions of the USDA Pilot Program are:
- Must be a primary residence
- Only a 30 year fixed rate is available
- Must document household income to verify that it is under the maximum limits for the county in which the property is located
- The home must be in a qualified state for the Pilot Program. See below for allowed states
- The last 12 monthly mortgage payments must have been on time
- No property inspections
- The new interest rate must be at least 1% lower than the current rate
- Borrowers may not be removed from the loan except in the case of the death of a borrower
- The new loan amount may include the principal loan balance, accrued interest, eligible closing costs, pre-paids, lender fees, escrow account establishment, and the up-front USDA funding fee
- No cash out is allowed
States eligible for the USDA Pilot Refinance Program are: Alabama, Alaska, Arkansas, Arizona, California, Colorado, Florida, Georgia, Idaho, Illinois, Indiana, Kansas, Kentucky, Michigan, Mississippi, Missouri, Montana, Nevada, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Washington, West Virginia, Wisconsin, and Puerto Rico. Other states not eligible for the Pilot Refinance could still use the USDA Streamline refinance with or without an appraisal.