Streamlined Process for USDA Refinance

USDA just got much better!  Rural Development loans have provided affordable payments with no down payment for years.  But now good just became awesome!!  Homeowners with a USDA mortgage have the perfect opportunity now to make their home even more affordable.  USDA has actually made two huge enhancements to this wonderful program which helps homeowners.  First of all, there is the streamlined USDA refinance loan.  This wonderful product removes much of the normal refinance requirements.  This includes no appraisal, no equity, no debt ratio calculation, and even no credit report!  We describe the full details below.  Secondly, there have been drastic reductions in purchase and refinance costs.  The reduction in the USDA funding fee and the annual fee creates affordability for current or prospective homeowners.

USDA Streamlined Assist Program Details

Before, USDA had a great product called the USDA Pilot Refinance Program, yet it was only available to certain states.  Now homeowners in all states are able to take advantage of the best time ever to refinance a USDA loan!  Furthermore, homeowners are able to include all costs into the loan which makes it even easier.  So let’s discuss the simple requirements for a USDA refinance below:

• No appraisal required.  *
• No credit report.
• Must have closed 12 months prior to the refinance request.
• No 30 day late payments
• No debt ratio requirement
• Includes payoff, closing costs, escrow set up, and funding fee
• Minimum $50 per month savings requirement
• May add a new borrower
• $85,000 minimum loan amount

* An appraisal is required if refinancing a subsidized USDA direct loan.

Let’s Explain The Guidelines In Detail

So can you believe that these are the actual guidelines for a mortgage these days?  That is why NC, SC, VA, GA, and TN homeowners with USDA loans should give us a call.  So let’s discuss the above in more detail.  First of all, there is no credit report.  We just have to verify 3 credit scores.  Then the middle score must be at least 640 to qualify.  Additionally, we must verify that there are no 30 day late payments over the last 12 months.  Even though a debt ratio is not calculated, we verify the household income meets the USDA requirement.  Since there is no appraisal or equity required, a homeowner can include all costs into the new refinance loan.  Furthermore, the loan may include the payoff, all closing costs, escrow set up, and the lower 1% USDA funding fee.

Although this refinance allows for an additional borrower, all existing borrowers must remain on the new loan.  For example, if the home was purchased in one person’s name but is now married, the spouse could be added.  Sound pretty good?  We are so excited to offer such a streamlined process which saves homeowners money!

How to Start a Refinance

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USDA Lowers Fees to Create Affordable Options

Prior to 10/1/16, it was difficult for homeowners with a USDA loan to refinance because of duplicating higher costs.  Depending on the purchase date, the homeowner originally paid a 2% – 3.5% fee to purchase the home.  Then the refinance required an additional financed 2.75% fee.  The numbers often didn’t make sense, which thwarted the excitement of a potential savings.  But since USDA has reduced both the funding and monthly fees, refinancing makes more sense!

So why did the 2016-2017 USDA Funding Fee and Annual Fee decrease?  Because foreclosure and delinquency rates have fallen to historic lows, USDA could afford this reduction.  Less risk means less costs.  USDA Rural Housing Service Administrator Tony Hernandez said “When our borrowers succeed, the program succeeds.  Excellent overall performance in our single-family housing guaranteed loan program means we can charge less for the life changing opportunity to own a home.”

To learn more about this huge savings for both homeowners and potential buyers, check out the article, Huge Decrease in the 2016 – 2017 USDA Funding Fee & Annual Fee.

For a Detailed Quote

We love providing detailed quotes so you can make an informed decision.  So if you have the following handy, it will help us help you!

• Most recent mortgage statement
• Current insurance declarations pages for all insurances (flood, homeowners, wind/hail).  Looking for the annual premium & renewal date
• Most recent property county tax bill (and city if applicable)
• HUD or Closing Disclosure from most recent closing

Interest Rates at All-Time Lows

So you know USDA drastically lowered refinance costs and streamlined the refinance process.  But unless you have been living under a rock, you should know that mortgage rates are at an all-time low!  Now rates have been extremely low for the whole year but because of previous refinance restrictions, a refi may not have worked for many.  In conclusion, USDA has the trifecta going on!

1. Low Interest Rates
2. Reduced Fees
3. Simplified Guidelines

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