If you have a USDA loan and you’re thinking of refinancing, you may wonder “Does USDA offer streamline refinance?”
Yes, they do. USDA loan programs, more specifically the USDA’s Streamlined and Streamlined-Assist Refinance options, allow current direct and guaranteed borrowers to restructure a loan for more affordable terms. This is true even if you have low to no equity. Your refinance can include your principal loan balance, accrued interest, upfront guarantee fees, and other eligible closing costs.
Read on for more information about the USDA streamline refinance program.
What benefits does a USDA streamline refinance offer?
In addition to securing lower interest rates, you can also refinance your loan to obtain lower monthly payments. For instance, if you’ve accrued five years of equity on a 25-year loan, you could potentially refinance to a 30-year loan to loosen the belt on your monthly budget. The program also provides a plethora of other potential perks:
- No new appraisal is required unless you’re receiving a subsidy
- No credit review required
- No home inspections requirements
- No calculation of debt ratios
No matter the reason for your refinance, your new rate will not exceed your previous one. For example, if you refinance your 20-year loan to a 30-year loan for a lower monthly payment, you don’t have to worry about your interest rate increasing.
How can I use USDA Streamline Refinance funds?
Not only can you use the USDA Streamline Refinance Program to restructure your mortgage, you can also harness these funds to build or make improvements to your home if you are a current guaranteed borrower. This option includes two closings—the initial closing for construction financing as well as a final permanent closing when construction is complete.
How can I qualify?
The USDA offers fixed-rate loans for up to 30 years for properties within USDA-eligible rural areas. Additionally, your new refinanced loan must include the same property as the original loan, and you must own and occupy the property. While the USDA does not require new property inspections to refinance, your OVM Financial loan officer may request this. Other requirements include the following:
- The property must be your primary residence.
- You must submit prompt mortgage payments for 12 months prior to applying for a streamlined-assist refinance and 180 days prior to applying for a streamlined refinance.
- You must achieve a minimum of $50 net reduction to your loan principal, interest, real estate taxes, and homeowners insurance.
- Your income cannot exceed the adjusted annual income limit for the property’s locality.
- All previous borrowers must remain on a streamline-assist refinance unless an original borrower passed away. You can, however, remove previous borrowers from a streamlined option.
- Your loan officer will require a full credit review for the streamline option; however, we won’t require a credit review for a streamline-assist refinance.