The USDA streamline refinance program is now available in all 50 states

The USDA mortgage rates are lower than most other programs and offers. Over the years, the USDA home loan has been able to help millions of individuals purchase homes in suburban and rural neighborhoods all across the United States. However, now this program offers powerful refinance options that promote housing that is more affordable.

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Fortunately, the loan rates offered by the USDA are low. The mortgage beat the program’s conventional counterparts quite often (i.e. Freddie Mac and Fannie Mae) by at least one-quarter percentage point. Potential savings on USDA refinance continue to grow. 

The USDA’s popular streamline refinance program also has been introduced in all 50 states. The program first launched its pilot program into 24 states. It was successful and in 2017 was rolled out on a national basis and in 2021 is still available. Today, thousands of more homeowners in the U.S. have access to unlimited-LTV, appraisal-less refinance. 

About the USDA’s streamline refinance program

The USDA’s streamline refinance program is available to homeowners who have a home loan with the USDA.  In 2012, this program went public. 

This program was intended to be similar to other successful streamlined programs like the FHA’s streamline refinance, The Department of Veterans Affairs’ VA streamline refinance program, and the HARP program offered by Freddie Mac and Fannie Mae. 

Also referred to as the USDA Streamlined-Assist Refinance, the program features low qualifying hurdles, with fast closings and underwritings. 

These loans close quickly since minimal eligibility standards are enforced by the USDA: 

  • The house that you are refinancing is required to be your primary residence 
  • The mortgage on the house must be from a USDA Guaranteed Home Loan or a USDA Direct Home Loan 
  • You must make 12 on-time payments in a row before you apply 
  • Your payment must be reduced by $50 per month at least

That’s it. USDA streamline refinance does not have any property inspection, home appraisal, or credit report requirements. You don’t need to use your current income to qualify. Current documentation is collected just to make sure you are within the USDA’s income limits still. 

The USDA’s streamline refinance program accepts most credit scores, and the loan-to-value on the home is not considered. Homeowners who are underwater can just as easily use the program as homeowners that have 20% equity. With this loan, you can even roll your escrow charges and closing costs into your new loan total. That allows homeowners to obtain zero-out-of-pocket refinance without a need for any upfront cash. 

USDA streamline refinance is available now in all 50 states. 

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When the USDA initially introduced its streamline refinance program, it limited the geographic range to just a certain sub-set of states. The reason why the USDA did this was that it was a new program and they wanted to be able to roll out their program in beta form. Limiting the distribution made it easier to identify any problems the program might have and make any necessary changes with minimal impact on homeowners. 

The USDA decided to make its new streamlined refinance program available in a total of 19 states. These were states that it identified as being the hardest bit by the economic downturn of the last decade. The USDA assumed that homeowners in those 19 states would be able to benefit the most from the program. 

The first 19 states that the USDA selected for its pilot program for streamline refinance were Tennessee, South Carolina, Rhode Island, Oregon, Ohio, North Carolina, New Mexico, New Jersey, Nevada, Mississippi, Michigan, Kentucky, Indiana, Illinois, Georgia, Florida, California, Arizona, and Alabama.  

The program was successful.

The USDA’s streamline refinance program helped homeowners in the U.S. to obtain low mortgage rates and offered genuine payment relief to households backed by the USDA 

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Due to the success of the program, the U.S. Department of Agriculture decided to expand its national reach by adding another 15 states, which brought the total to 34 states. After several successful tests, the USDA’s program is available in all 50 states now. Homeowners who hold a USDA loan in any region are able to use the highly effective rate reduction programs. 

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There are currently 3 different kinds of refinances available from the USDA

Multiple refinance types are offered by the USDA to meet different homeowner circumstances. 

1. USDA Streamlined-Assist refinance

This is the most popular, and in most cases the most beneficial type of refinancing offered by the USDA. 

The USDA Streamlined-Assist refinance does not require any income qualification, credit check, or appraisal. Underwater houses are also eligible. There are also two other kinds of refinances that are offered to homeowners by the USDA.

2. Standard Streamline refinance

The same rules from the Streamlined-Assist loan are generally followed by the standard streamline program. Underwater houses are eligible and an appraisal is not required. 

However, in other ways, the option is less flexible. For example,  homeowners must meet debt-to-income standards applicable to the USDA’s home purchase loans and supply proof of their current income. Standard streamline borrowers are also not able to roll closing costs into their new loan. Most likely upfront cash will be required.

So, why would this option be selected by a homeowner? Two reasons:

  • The monthly payment is not required to drop by at least $50. 
  • Existing borrowers who are on the note can be removed as long as at least one of the original borrowers stays on the loan. 

Therefore, if there is a divorce, a homeowner might opt for a standard streamline loan so that the ex-spouse can be removed. Also, if the reduction in the monthly payment is only $40, then the homeowner will not be eligible to obtain a Streamlined-Assist Loan and can select the standard streamline option instead. 

3. USDA non-streamline refinance

A standard “full” refinance is also offered by the USDA that is similar to the non-streamline options offered by Freddie Mac and Fannie Mae. An appraisal is required by the loan, and the maximum amount of the loan is 100% of the current value of the home plus a new guarantee fee. Income and credit guidelines must be met by the borrower that is similar to those imposed on the USDA’s home purchase loans. 

This kind of loan can be used by the borrower to avoid the $50 minimum payment reduction requirement on the standard refinance option, or to have a borrower removed from the note. 

This non-streamline option also allows homeowners to roll their closing costs into a new loan as long as there is an adequate new appraised value. The standard streamline does not offer this feature. 

Where can a USDA streamline refinance lender be found?

Consumers need to be aware that not every lender offers the USDA streamline refinance program. This is normal. Lenders select which loan production they want to offer based on how much business they believe they will get from it. 

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A certain kind of loan will not be offered by some lenders, while other lenders will specialize in these types of loans to get all of the business that is being left behind by all the other lenders. Continue to check with national and local banks, both online and in-person. until you find a lender that offers the program you want. 

Other notes on the USDA streamline refinance program:

  • There are additional advantages that come with the program. 
  • For one thing, you might be able to get your annual fee reduced. 
  • The USDA lowered its fees in October 2016. The annual fee went from 0.50% down to 0.35%. 

The upfront fee also was reduced from 2.75% down to 1.00%. This made the USDA streamline refinance program more affordable both initially and monthly. These new fees are helping homeowners meet their $50 per month minimum payment reduction requirement on the Streamlined-Assist program. 

You are also geographically eligible to get a USDA refinance now even if the eligibility maps have changed since you purchased your house. You are eligible based on being a USDA homeowner and not based on the current USDA maps. The USDA’s refinance program helps to reduce homeownership costs. However, many USDA borrowers wonder if the USDA offers cash-out refinance. 

All of the refinance types offered by the USDA are “rate-and-term” loans only. That means at closing that no cash is allowed to be taken out. However, with all of the different refinance options that the USDA offers, homeowners save a serious amount of money every month. This is putting millions of dollars into USDA homeowner pockets all across the country. 

Mortgage rates today are still very low. There are great opportunities to refinance to save a good amount of money. The USDA’s streamline refinance also makes it easy to check your eligibility and to obtain a lower-rate, new mortgage. Check out today’s mortgage rates. You do not need to use your social security number to start, and all quotes provide you with instant access to your current credit scores.

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