Borrowers that reside in rural areas may qualify for USDA mortgage refinancing that provide special benefits for qualified prospects. USDA mortgage interest rates have have been rising over the last few years,. Still, USDA mortgage rates are still being published with affordable pricing, and this makes it a tempting time for refinancing.
And for people who have a USDA mortgage, the interest rates are even lower most of the time. USDA mortgage rates will often beat conventional rates from Fannie Mae and Freddie Mac by ¼ of a point at least. This can mean big savings for a USDA mortgage holder who does a refinance. The RefiGuide can help you shop and compare the best refinance rates available online today.
Refinance with Low USDA Mortgage Rates and No Equity Required!
Also, the USDA makes refinancing quite easy with its USDA Streamline Refinance Program. The USDA is now helping homeowners in 34 states to do fast and easy mortgage refinances through the special USDA program.
As of 2024, at least 500,000 USDA mortgage loan holders are eligible for the streamline refinance program, which can help them to save as much as 35% on their payments. How much does it cost to refinance your home?
Details about the USDA Streamline Refinance Program
The USDA Streamline Refinance program is the primary way for USDA lien holders to refinance their home loans and potentially save big on payments, as well as interest payments over the life of the loan.
The USDA program is quite new, having just begun in 2012. It has been modeled upon other successful streamline refinance programs that the US government offers, including the FHA Streamline Refinance program and the VA Streamline Refinance program. It also bears similarities with the HARP refinance program offered by Fannie Mae and Freddie Mac, which is designed for homeowners who owe more on their home than it is worth.
The USDA tries to help as many USDA mortgage holders as possible by keeping loan qualifying standards low and underwriting as fast as possible. Most closings can be scheduled in as little as three weeks after the homeowner submits an application.
These loans can close fast because USDA home loans have these minimal eligibility requirements:
- The home that you want to refinance must be your primary residence
- The home that you want to refinance has to have a mortgage from the USDA Direct Home Loan program or the USDA Guaranteed Home Loan Program
- Before you apply, you need to have made 12 payments on time. Remember that this is not a program for those who are behind on their mortgage. It is to help those who are on time and current to refinance into a lower rate.
Those are all of the requirements to be eligible for the USDA Streamline Refinance program. You do not even need to have your credit score checked. So if you have any dings on your credit, you still can qualify for a refinance in most cases and save big every month.
Further, you do not need to have a current home appraisal, so there is no chance that the house will not appraise and you will be unable to refinance. There also are no requirements to have the property inspected.
There is no minimum credit score standard and the LTV of your home is not considered. You even can refinance your USDA mortgage if you owe more than the home is worth.
The USDA offers special home loans for people who want a competitive mortgage refinance and also live in rural America.
USDA Streamline Refinance States
When the USDA mortgage program first was launched, the US government did limit it to certain states. It did so because the agency wanted to roll it out in a limited fashion when it was first introduced. With it available in a limited number of states, it would be much easier to determine what if any problems there were with the program. Check and see what today’s refinance mortgage rates are.
The USDA decided to make the streamline refi program available in 19 states at first. These states were those that were deemed to have been hard hit in the recent economic downturn. Those states were AL, AZ, CA, FL, GA, IL, IN, KY, MI, MS, NV, NJ, NM, NC, OH, OR, RI, SC and TN.
The program worked very well from the start. It helped thousands of homeowners in those states to get into better first and second home mortgage rates and to get their payments lower so they would not lose their homes.
After that the USDA mortgage loan then expanded the availability of the program to more states: AK, AR, CO, ID, KS, MO, MT, ND, OK, SD, TX, UT, WA, WV and WI.
USDA has done its best to help homeowners to get into refinanced mortgages, but there are still some standards and requirements you should know about:
- All streamline refinances have to have the upfront loan fees that are standard for USDA and FHA-approved loans.
- All of these USDA refinances have to have annual premiums paid as well.
- Flood insurance is mandatory if the home is in a flood zone.
- The USDA streamline program requires that your mortgage rate go down by 1 point or more.
- Loans are available in 15 or 30 year terms.
Top 3 USDA Mortgage Refinancing Programs
There are still robust refinance options for existing borrowers that presently have a USDA mortgage and are seeking to reduce their interest rate—USDA provides three advantageous refinancing alternatives: USDA streamline refinance, USDA streamline-assist, and a non-streamlined refinance.
USDA Streamline Refinance: This program is for homeowners who have been current on their USDA loan for the preceding 12 months might qualify for a refinance without the need for a new appraisal. Moreover, they have the flexibility to add or remove borrowers from the note. The streamline program is not a refinance for cash out.
USDA Streamline-Assist Refinance: The option is widely regarded as the most favorable USDA refinance option. This program eliminates the necessity for a new appraisal, credit checks, or assessments of debt-to-income ratios. It’s especially accommodating for borrowers with limited or no equity in their homes.
Non-Streamline: This refi-option from the USDA closely mirrors the streamline refinance, but it mandates a new appraisal. Borrowers opting for this refinancing avenue may do so to bypass the $50 payment reduction requirement for the streamline-assist or to secure an updated appraisal for their property.
The Bottom Line on USDA Mortgage Refinances
If you hold a USDA mortgage in one of the above states and your rate is well above the current interest rates, you should strongly think about getting a USDA Streamline Refinance mortgage. Given that there are such low qualifying standards, there is a very good chance that you could have a lower USDA mortgage loan payment in as little as a month!
About RefiGuide
Bryan Dornan is a financial journalist and currently serves as Chief Editor of RefiGuide.org. Bryan has founded several mortgage and marketing companies and has worked as a loan officer and mortgage broker in the industry for over 25 years and has a wealth of experience in providing mortgage clients with the highest level of service in the industry. Bryan's continual focus is to promote affordable home-ownership to consumers like you across the United States. He also writes for RealtyTimes, Patch, Buzzfeed, Medium and other national publications. Find him on Twitter, Muckrack, and Linkedin
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