Questions? Call (310) 455-8511

Can You Refinance With a USDA Loan?

If you are looking to refinance in order to get the best rate and terms so you can start saving money, looking for an easy process with more favorable guidelines, a USDA loan may be the best choice for you.

USDA fixed rate loans are one of the most popular programs for refinancing. This is where you have stable predicable payments each month, and as a result, offers you the most security for yourself and your family. If you are currently in an adjustable rate mortgage (ARM) and would like the security of a fixed rate, a fixed rate USDA refinance is the right program for you.

Refinancing with USDA Home Loan

USDA refinances are for rate and term refinance loans (no cash out allowed). The original loan must be a Guaranteed Rural Housing Loan.

Refinancing into a USDA loan is a very similar process to refinancing using conventional financing. In fact, both loans require almost identical paperwork.

Here’s a quick rundown of what you need to do:

  • Speak with your assigned USDA Loan Officer to discuss programs and options;
  • Complete a full mortgage application with the assigned lender;
  • Upon approval, supply the required documentation;
  • Coordinate with appraiser that lender chooses;
  • Send in loan package and clear conditions from the Bank;
  • Schedule closing.

That whole process generally takes no more than 30 days!

One nice advantage of refinancing is that you are allowed to skip one month of your mortgage payment after you close. Depending on when in the month your mortgage closes you may possibly not make the current mortgage payment and skip the following month as well.

You can use this money to pay off another bill, fix up your home, or even go on vacation.

USDA Streamlined-Assist Refinance

If you want to lower your mortgage rate and payments, this is usually the best option.

The main advantage of a USDA Streamlined-Assist Refi is that no credit approval is required.

This means that the lender is not required to verify your credit score, credit report, or debt-to-income ratio. (Though some do, so inquire about a lender’s policies before applying.)

Even if your finances aren’t in the best shape, you could qualify for a lower interest rate with the Streamlined-Assist refinance.

Furthermore, even if you have little or no equity in your home, you can refinance it. Because no home appraisal is required, you may be able to refinance even if the value of your home has decreased and the new loan amount exceeds it.

Your new loan must reduce your monthly mortgage payment by at least $50 to qualify for this Streamline Refinance program.

Requirements for USDA Streamlined-Assist Refinance:

  • There will be no new credit checks or debt-to-income requirements.
  • Mortgage refinancing must result in a monthly payment reduction of at least $50.
  • Borrowers have the option of financing the principal, interest, closing costs, and upfront USDA guarantee fee into the new loan balance.
  • Prior to the refinance request, the current USDA loan must be paid on time for 12 consecutive months.
  • Borrowers can only be removed from the loan if they die, but a new co-borrower can be added.
  • Only when a Direct Loan borrower receives a subsidy is a new appraisal required.
  • The property must be the borrower’s primary residence.
  • Borrowers must continue to earn less than the USDA’s income limits.

Finding out how much you can save takes less than 30 seconds. Get started today!