USDA Streamline Assist: The Easy Way to Refinance!

Learn if you're eligible for a reduced interest rate wth the USDA Assist program.

The streamlined assisted refinancing program enables existing USDA guaranteed and direct mortgage borrowers with little or no equity to refinance into a more reasonable mortgage payment.

Features of the program include:

  • No appraisal is necessary, except for direct mortgage customers who were awarded a subsidy.
  • If direct borrowers are unable to pay the subsidy recapture in full, they may subordinate the subsidy amount. (Recapture is another word for "pay back")
  • While no credit check is necessary, the USDA must verify that the mortgage was paid in full for the twelve months before the refinancing application. The USDA guidelines do require house inspections or the determination of debt-to-income ratios.
  • A $50 net reduction to principal, interest, property taxes, and homeowner's insurance (PITI) payments in comparison to current PITI.

Streamlined Assist Refinance Eligibility?

Nice country houseExisting USDA guaranteed and direct rural homeowners who have been up-to-date on their mortgage for a at least twelve months prior to refinancing.

The borrower's family income cannot exceed the maximum yearly adjusted income limit for the metropolitan statistical region or county in which the residence is situated. Verify that you are eligible for the program based on your income.

Refinance transactions are still available for properties that are no longer situated in an eligible rural region.

Borrowers may submit applications via USDA-approved lenders that participate in the
USDA Streamlined Assist Refinance program.

After the refinancing, all original borrowers must remain on the note.

The loan may be expanded to include other borrowers.

What Can I Included in the Assist Refinace?

The new loan can include the principal mortgage balance, accrued interest (also called per diem interest), the guarantee fee paid upfront, and other customary loan closing costs.

What Are the Loan Terms?

The new interest rate cannot be greater than the existing rate on the loan being refinanced, and may not exceed the maximum allowable rate on the day the interest rate is locked. The term of the streamline assist loan may not exceed 30 years.

Who Qualifies for a Usda Mortgage?

  • U.S. citizens
  • Deceased borrowers may be removed from the loan.
  • Non-occupant borrowers are ineligible.
  • Non-permanent residents are allowed as long as they are qualified aliens with proof of lawful residence.
  • Additional borrowers may be added to the new loan.
  • All borrowers must have a valid Social Security Number (SSN).
  • Permanent resident aliens are eligible with proof of lawful permanent residence.
  • Voucher for Housing Choice Income from the Homeownership Program (commonly known as Section 8 for homeowners) is an acceptable source of income.

Real Estate Tax and Insurance Escrow Requirements

An impound account (escrow) for the collection of homeowner's insurance and taxes is required.

How to Manually Calculate Usda Guarantee Fee

The guaranty fee is a small sum of money that borrowers pay initially (and monthly) to help support the USDA loan programs. The guaranty fee is used to reimburse lenders for delinquent loans that were subsequently foreclosed on.

Upfront Refinance Fee: 1% of the loan amount

In addition to the initial 1% guarantee fee, the borrower is required by the USDA to pay an annual fee. The calculation is simple. Multiply thy the loan amount by .35%. The fee is collected monthly, so divide the annual cost by 12 (months).
The annual fee is 0.035% X $100,000 (example) = $3,500/12 = $29.17 monthly.

USDA Maximum Income Limits

The borrower's adjusted yearly income may not exceed the Rural Development limitation for the area. Refer to the USDA Property and Income Eligibility website.

Complete income verifications/documentation for all adult household members and borrowers is required.

Rate and Term only

The new loan may include the original loan's principal balance plus the upfront guarantee fee, qualifying loan closing charges, and accumulated interest (per diem interest).

The USDA Streamlined Assist Refinance Loan does not permit "cash-out" on refinancing transactions. Applicants for streamlined-assist refinancing loans, on the other hand, may be reimbursed at settlement for initial costs given to the lender for qualified loan purposes as part of the refinance transaction, such as the appraisal or credit report fees. At loan closing, the applicants may receive a minimal amount of "cash out" as a consequence of the final escrow and interest computations.

Loans made via the Rural Streamline Refinance program are not eligible.

Eligible Properties for USDA Loans

  • Leaseholds with a minimum length of lease of 15 years beyond the maturity date of the loan.
  • for a single-parent family. Attached
  • and detached PUDs and condos
  • The property must be in an eligible rural area or an area that was eligible at the time of the original loan closing.

Ineligible Property Types

  • 2-4 units
  • Condotels
  • Cooperatives
  • Geodesic Domes
  • Hotel Condominiums
  • Income-producing properties that do not fit the standards of Rural Housing.
    Grain bins, silos, dairy farms, hog barns, and horse stables are all properties considered ineligible.
  • Manufactured homes. This includes on-frame modular homes built on a permanent chassis.
  • Mobile Homes
  • Timeshares
  • Unimproved Land and property currently in litigation
  • Working Farms and Ranches

SOURCE: USDA underwriting

Conclusion

In conclusion, the USDA Streamline Assist program is a great way for homeowners to refinance their mortgage. The process is simple and straightforward, and homeowners can save money on their monthly payments. If you are considering refinancing your mortgage, be sure to check out the USDA Streamline Assist program.