Along with providing affordable financing for low-to-moderate income households, the USDA offers two simplified refinance options for utilizing your home’s equity to lower your monthly payments: streamlined and streamlined-assist.
Both options are available only to existing USDA homeowners. You don’t necessarily even need a credit check or new appraisal to refinance, either.Compare each streamline option below to decide which is right for you.
|Remove Borrowers||Yes||Only if deceased|
|Income & Credit Verification||Yes||No|
|Mortgage Requirement||Consecutive on-time payments for last 6 months||Consecutive on-time payments for last 12 months
$50 or greater reduction of monthly payment
|Existing Loan Age||12 month minimum||12 month minimum|
|Underwriting Process||Automated (faster)||Manual (customizable)|
|Additional Options||Finance-in closing costs and USDA guarantee fee||Finance-in closing costs and USDA guarantee fee|
The USDA streamlined refinance loan makes refinancing easier and more efficient for qualifying USDA borrowers.
There are no appraisals or inspections required in most cases, and you can refinance up to your home’s current value, which can be helpful if your property value has increased, and you want to reduce your monthly payment. You can also finance your closing costs and the upfront guarantee fee into the new loan.
USDA streamlined refinances are available to existing USDA borrowers who have made on-time payments for the last six months. Borrowers also need to have had the USDA loan for a full year prior to refinancing.
Homeowners applying for a streamlined refinance need to meet the debt-to-income and credit score requirements of their lender, which can vary from one company to the next.
The streamlined-assist is another type of USDA refinancing program. Over the past three years, just under 11,200 streamlined-assist refinances were done in the United States — accounting for nearly 60% of all USDA refinances.
The difference with these refinances is that you’ll need to have made 12 on-time payments, and there is no credit check or debt-to-income calculation required.
USDA streamlined refinances come with both an upfront fee and an annual USDA guarantee fee. The upfront fee, which is paid at closing, costs 1% of your loan balance — so $2,000 on a $200,000 loan. There is also a 0.35% annual fee which is spread across your monthly payments.
You might also pay additional closing costs such as origination fees (these vary by lender), processing/underwriting fees, notary fees, title search and insurance, mortgage points, credit check fees and more. Your lender will give you a full breakdown of costs when you apply for your loan.
The USDA streamlined refinance program — and the streamlined-assist — can be a good option if you’re looking to lower your monthly payment or interest rate. They can be especially beneficial if market values are rising, and you want to refinance for the current value of your home (reducing your payment significantly in the process).
To learn more about your refinancing options, get in touch with a Neighbors Bank loan specialist today.