USDA  just announced a new USDA streamline refinance pilot program expected to help LOTS of homeowners across Alabama, Georgia, Florida, Tennessee, South Carolina and 14 other states.

No income, no appraisal, no assets, no NOTHING! – That is the new USDA Streamline Refinance program.

So, how does the new rural housing refinance program work and how can you take advantage?

Rural Streamline Refinance Guidelines

1. The loan must be a USDA loan
2. The new interest rate must be a fixed rate 1% below your current rate. Due to recent mortgage insurance changes with USDA that added .30 in annual mortgage insurance, you’ll need at least a point to see enough savings.
3. USDA Streamline Refinance is only available on a 30 Year FIXED rate.
4. USDA Loan Balance – you cannot ADD to your loan balance. You will pay the closing costs or your lender will premium price your USDA Streamline refinance and pay them for you.
5. USDA mortgage insurance does apply. As of 2012, all USDA loans have an annual mortgage insurance rate of .30 of the loan balance.
6. No appraisal, no credit and no income documentation is required. Some USDA streamline refinance lenders MAY require a property inspection to ensure that the subject property still meets USDA guidelines.
7. USDA Streamline Refinance Pilot loans must be manually underwritten.
8. Closing costs, as with almost ALL mortgage loans including USDA refinances, are still applicable. There are still third parties that have to do their jobs. Title needs to be pulled, you need to sign the closing docs and loan officers still need to feed their families. You do, however, have closing cost options that include NOT having to pay ANYTHING for your USDA streamline refinance out of pocket

USDA Streamline – Closing Cost Options

Like I stated before, nothing is free. There are people that work and want to get paid for those services. I don’t care what you heard on the news, don’t be a sucker. HARP Refinances are no different, they also have closing costs. FHA Streamline Refinance loans do too.

Now that we have established USDA Streamline Refinances (Pilot Version) are going to have some closing costs. How do we pay the costs? Out of pocket? Rolled into the loan?

USDA Streamline – NO CLOSING COST

Most of my FHA Streamline borrowers prefer this option. I’ll bet that most people pursuing the USDA Streamline Refinance will too.

Basically, ALL no cost refinances work the same. The closing costs still exist and still have to be paid, only the LENDER will pay them for you. Why and how would the USDA streamline refinance lender do that? Through increased interest rate.

ALL NO COST REFINANCES, USDA STREAMLINE REFINANCE INCLUDED, COME WITH AN INCREASED INTEREST RATE.

Sorry to yell, but I wanted to be as clear as possible on how no cost refinances work. If a mortgage lender tells you different then you need to find another mortgage lender.

USDA Streamline – LOW Closing Costs

When you pursue your USDA refinance you should be able to check out multiple closing cost options. Along with a NO COST streamline, you will have low cost and full cost options.

Each USDA Streamline Refinance closing cost option should have a different interest rate. Higher the closing costs, lower rate. That’s how it works.

Check out all your options, low cost, no cost and full cost. Look at break even points on the costs and savings on each USDA Streamline refinance option.

Do Income and Geography Restrictions Apply for USDA Streamline Refinances?

Yes. USDA Streamline Refinance income guidelines still apply. USDA Streamline Refinance loans do NOT require you to be re-approved for geography. If you originally were in USDA territory then you will STILL be good, regardless of community growth.

 

Don’t have a USDA Loan? We have streamline refinance programs for Fannie / Freddie via a HARP Refinance and for FHA borrowers via a FHA Streamline Refinance.