The U.S. Department of Agriculture has made refinancing USDA mortgages “ faster and cheaper” for its homeowners through its new StreamlinedAssist Refinance Program.
Tony Hernandez, the administrator of the USDA’s Rural Housing Service, announced recent changes that will help rural residents refinance to avail of low interest rates and lessen their monthly payments. These changes allow homeowners with current mortgages to not (i) secure a home appraisal, (ii) obtain a credit report, or (iii) go through a DTI ratio (debttoincome) calculation if they opt to refinance into a 30year term loan. These are effective 2 June 2016 and will apply to loans issued through the USDA and those with USDAissued loan note guarantee.
Rural Refinance: Then and Now
The USDA has been rolling out those changes through the Rural Refinance Pilot Program launched in 2012. The pilot program was initially offered in 19 states which the agency considered to be hardest hit by the housing and economic downturn a couple of years back. Because of its success, the program was expanded to include 15 more states.
USDA’s Rural Refinance Pilot Program is currently available in 34 states: Alabama, Alaska, Arizona, Arkansas, California, Colorado, Florida, Georgia, Idaho, Illinois, Indiana, Kansas, Kentucky, Michigan, Missouri, Mississippi, Montana, Nevada, New Mexico, New Jersey, North Carolina, Ohio, North Dakota, Oklahoma, Oregon, South Dakota, Rhode Island, South Carolina, Texas, Tennessee, Utah, West Virginia, Washington, and Wisconsin.
To date, some 9,500 homeowners have been able to refinance their mortgages, saving them $150 per month.
Owing to its success, the RHS has adopted this pilot into another refinance option for USDA mortgage loans and named it “streamlinedassist” refinance.
How Does StreamlinedAssist Refinance Work?
This special refinance program, just like the Rural Refinance Pilot Program, allows borrowers to refinance existing Section 502 home loans, guaranteed or direct, and thus lower their interest rates and monthly payments. As noted by Mr. Hernandez in a January 21, 2016 press release, the Rural Refinance process aims for “ greater speed and ease” when it comes to refinancing, requiring lesser paperwork to be submitted and shorter time to process the loan.
What it requires for each loan
The StreamlinedAssist Refinance program has the same features as the Rural Refinance Pilot Program, which include:
- The interest rate of the loan must be fixedrate, being at least 1% below the current loan’s rate.
- The refinanced loan must have a term of 30 years.
- The usual upfront fees and annual guarantee fees will apply.
- The program allows borrowers to be added to but not to be removed from the loan unless they are divorced or deceased.
- Cash out is not permitted.
What it requires of you
If you want to avail of this “streamlinedassist refinance”, you must satisfy these requirements:
- Able to meet the current eligibility requirements for household income;
- Live in a rural area designated as eligible by the USDA or was designated as such during the original loan’s closing;
- Property to be refinanced must be your primary residence;
- Timely mortgage payments have been made within the last 12 months before the refinance.
- Flood insurance is required if the property is located in a flood zone.
- Documents such as Uniform Residential Loan Application and Form RD 355521 Request for Single Family Housing Loan Guarantee are to be submitted.
What it does not require of you
As noted earlier, USDA’s StreamlinedAssist Refinance will not require borrowers to obtain (i) a new appraisal except for loans that received a subsidy, (ii) a credit report, and (iii) a property inspection, as well as minimum property determinations set forth in the HUD Handbook.
The program also does not require DTI or debttoincome ratios so waivers for DTI requirements are not needed.
USDA Refinance and You
Talk to a lender now for more details on how you can refinance your existing USDA loan through the StreamlinedAssist Refinance.