Refinancing is a way of replacing your existing mortgage with a new home loan, and it can be a useful way to lower your monthly mortgage payment or secure a loan with more attractive terms. If you purchased your home with a loan issued by the U.S. Department of Agriculture (USDA) and are now intrigued by the idea of refinancing, then you’ll want to take a look at the USDA refinance programs. With a trio of options to choose from, you can select the refinance program that best suits your needs.
Exploring the USDA Refinance Programs *
According to the USDA in May 2016, borrowers who have taken advantage of its refinance programs have shaved as much as $600 off their monthly mortgage payment. Of course, not everyone sees that drastic a change. On average, borrowers save $150 a month, which works out to $1,800 a year. With the potential for savings like that, it’s easy to see why eligible borrowers find these programs appealing. What do you need to know about the three USDA refinance programs?
USDA Streamlined-Assist Refinance Program
Would you like to refinance without any out-of-pocket costs? The USDA Streamline-Assist Refinance program might be exactly what you’re searching for. With this program, you can roll closing costs and other charges into the loan amount, so you don’t have to come up with any cash to refinance. There’s also very little paperwork to hassle with. There’s no demand for an appraisal or property inspection. And although you’ll have to document that your current income is within the income limits set by the USDA, you won’t need to demonstrate that it is enough to qualify for the loan or provide a perfectly polished credit score. In fact, you’ll only need to meet four basic eligibility requirements:
- The home must be mortgaged with either a USDA Direct Home Loan or a USDA Guaranteed Home Loan.
- The property must be your primary residence.
- Refinancing must result in a drop of at least $50 in your monthly mortgage payment.
- In the year prior to your application, all your mortgage payments must have been made on time (12 month minimum).
USDA Standard Streamline Refinance
The USDA Standard Streamline Refinance program shares some similarities with the Streamline-Assist program. Again, you can only refinance your primary residence, it must be mortgaged with a USDA loan, and your last 12 payments must have been made in a timely manner. As with the streamline-assist program, no appraisal is needed. However, there are some notable differences.
To refinance with the Standard Streamline program, you must show proof of your current income and meet the debt-to-income standards set for USDA purchase loans. In addition, you’ll need cash to cover closing costs because they cannot be rolled into the new loan. In return for these restrictions, the Standard Streamline offers some benefits that the Streamline-Assist can’t match. For example, you can drop one or more of the borrowers from the note as long as at least one of the existing borrowers remains on the loan. In addition, you don’t have to hit the threshold of a $50 drop in your monthly payment.
USDA Non-Streamline Refinance
What if you want to avoid paying closing costs upfront, but you can’t meet the requirement for a $50 drop in the monthly payment? It’s less convenient, but the USDA Non-Streamline Refinanceprogram might be your best option. This is a full refinance, so you’ll need to provide the necessary documentation to show that you meet credit and income guidelines similar to those set for USDA purchase loans and get an appraisal. However, you can roll closing costs into the new loan, and there’s no minimum threshold for the savings on your monthly payment. You’ll also have the option of removing a borrower from the note.
USDA Refinancing With PrimeLending
At PrimeLending of Kansas City, we thrive on matching customers with the best possible loan. Could our USDA refinancing program be the right fit for you? If your property is currently financed with a USDA Guaranteed Home Loan, you meet the applicable adjusted income limit, and you have consistently made timely mortgage payments for at least the 12 months preceding your application, then our USDA refinance products might be ideal for your needs.
Do you have questions about USDA refinance programs or other refinancing options? Turn to the team at PrimeLending of Kansas City for friendly, accessible service. You aren’t just a number to us – you’re a neighbor. That’s why we work diligently to provide useful, straightforward guidance and plenty of transparency as you navigate the process of securing or refinancing a mortgage. We offer a wide range of products, and it would be our pleasure to help you select the option that best suits your situation. To set up a consultation, contact us today.
*Additional restrictions may apply. Contact your PrimeLending loan officer for more details.