If you've received a United States Department of Agriculture (USDA) loan in the past, you know how beneficial this program can be for low- to medium-income homebuyers. By providing $0 down and lenient eligibility requirements, the USDA loan is able to open the housing market to buyers who would not otherwise qualify.
Even better news for current USDA loan borrowers looking to lower their rate, the USDA offers three favorable refinancing options: USDA streamline refinance, USDA streamline-assist and a non-streamlined refinance.
The USDA streamline refinance, first launched in 2012, fashioned itself to reflect other successful streamline programs like the popular VA Interest Rate Reduction Refinance Loan.
Through the USDA streamline refinance, homeowners current on their USDA loan for the previous 12 months may be able to refinance without a new appraisal and even add or remove borrowers from the note.
If you've received a USDA mortgage and feel that your rate is higher than the current rate, refinancing your loan is an option. There are a few requirements, however, to meet before you begin the refinancing process.
Those interested in USDA streamline refinancing should know that cash cannot be taken out of a USDA streamline refinance. However, those refinancing may roll the guarantee fee into the final loan amount.
The USDA streamline-assist refinance is often seen as the most favorable USDA refinance option.
This program does not require a new appraisal, credit checks or calculations of debt-to-income ratios. Additionally, borrowers with little or no equity in their home may apply.
Requirements for the USDA streamline-assist refinance are similar to that of the streamline, with a few additional details that include:
The USDA’s non-streamline option is very similar to the USDA streamline; however, borrowers are required to get a new appraisal.
Borrowers considering this refinance option may do so to avoid the $50 payment reduction requirement for the streamline-assist or to receive an updated appraisal on their home.
Note that by refinancing your existing loan, your total finance charges may be higher over the life of the loan.