USDA Refinance Options

One of the benefits of USDA Loans is their ability to be refinanced. If you have a USDA loan and are looking to lower your interest rate there are three refinancing options: USDA Streamline Refinancing, USDA Assist-Refinancing, or Non-Streamline Refinancing.

Streamline Refinance

If you’ve received a USDA loan and feel that your rate is higher than the current rate, refinancing your loan is an option. However, there are a few requirements to meet before you begin the refinancing process.

• The mortgage must already be a USDA loan (Guaranteed or Direct).
• The mortgage must be current for the 180 days prior to the refinance request.
• The existing loan must have closed 12 months prior to the USDA refinance request.
• The homebuyer must meet the USDA’s debt-to-income ratio and credit requirements.
• The maximum loan amount must not exceed the original loan amount at time of purchase.

Streamline-Assist Refinance

This is often seen as the most favorable refinance option. Although requirements are very similar to streamline refinancing there are a few aditional requirments.

• The refinance must result in a $50 or greater reduction in the borrower’s monthly payment.
• The existing mortgage loan must be current for the 12 months prior to the refinance request.
• Those refinancing a USDA direct loan will require a new appraisal.
• Borrowers may be added to the note, but not removed.

Non-Streamline Refinance

The USDA’s non-streamline option is again, very similar to the USDA streamline. The primary difference is, borrowers are required to get a new appraisal. Borrowers considering this refinance option may do so to receive an updated appraisal on their home or to avoid the $50 payment reduction requirement for the streamline-assist.