People refinance for a lot of reasons. One of them being to have better loan terms than the one they currently have.
In hopes of reducing their current monthly mortgage payment or getting a new mortgage in order to have more savings or pay off their loan faster, refinancing has proven to reap a lot of benefits to those who need it the most.
For home loans under the United States Department of Agriculture (USDA), refinancing your mortgage is possible under a single-family housing program: the Streamlined Assist Refinance Loan.
Let’s discuss everything there is to know about this refinance program.
What is the Streamlined Assist Refinance all about?
The USDA’s Streamlined Assist Refinance program provides an opportunity to USDA direct and guaranteed borrowers an opportunity to refinance their mortgage into better terms.
According to the USDA, those interested to refinance through this program should understand its features. These are the following:
- No new appraisal required, except for direct borrowers who received subsidy during their loan term.
- Direct borrowers that owe subsidy recapture may subordinate this amount if they are unable to pay it in full.
- No credit review required, but we must verify the mortgage was paid as agreed for 12 months prior to the refinance application.
- No home inspections or calculation of debt ratios.
- At least a $50 net reduction to principal, interest, real estate taxes, and homeowners insurance (PITI) payments compared to current PITI.
However, borrowers should understand that, like any other mortgage program, there are certain provisions of this under the streamlined assist refinance loan that they have to know about.
Who can take advantage of this program?
Like any other mortgage applications, borrowers should meet the guidelines or requirements set by the program.
The USDA Streamline Assist Refinance Loan has their own set of guidelines, too.
Borrowers who are USDA direct and guaranteed rural homebuyers may apply to refinance their mortgage. They should be current on their home loan for the past 12 months upon applying.
Their income eligibility should not be more than the adjusted annual income limit for the property’s location.
Specific figures depending on the location can be accessed through the USDA’s income eligibility page.
Borrowers with existing USDA direct and guaranteed loans with properties in locations that are not considered an eligible area anymore can still apply for a refinance. They should refinance through USDA approved lenders.
Are there specific loan terms?
There are certain loan terms that borrowers need to know about.
After refinancing, the new mortgage interest rate should not go beyond the loan that’s being refinanced.
It should not also exceed the maximum allowable rate for the date that the rate is locked. Finally, the newly refinanced mortgage should not go beyond 30 years.
Are you ready to refinance?
Keep in mind that deciding to refinance your existing mortgage should be a calculated decision.
Refinancing is not for every situation that’s why you should weigh the pros and cons and evaluate the current state of your mortgage. In the end, refinancing reaps a lot of benefits when done right.
For more inquiries about USDA’s Streamlined Assist Refinance Loan, remember to always contact your trusted USDA approved lender or a USDA Rural Development Guaranteed Loan Coordinator.Ask our lenders today.