USDA Streamline Assist: The Easy Way to Refinance!

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

Refinance your mortgage grapphicThe USDA Streamlined Assist Refinance Loan is a great option for current USDA borrowers who are pinned down by higher monthly payments. This program offers simplified credit qualifying guidelines. In this article, we'll tell you more about the USDA Streamlined Assist Refinance Loan, and how it can help you get out of debt faster.

If you're looking to lower your monthly mortgage payment, the USDA streamline refinance loan may be a good option for you. This program is offered by the United States Department of Agriculture (USDA) and is available to homeowners with an existing USDA rural development loans. One of the benefits of this program is that it generally does not require an appraisal, which can save you both time and money.

What Is a USDA Streamline Assist Program?

The USDA Streamlined Assist Refinance Loan is a program that was created to help homeowners who have an existing USDA mortgage refinance their mortgage. This program is only available to homeowners who are current on their mortgage payments and who meet certain eligibility requirements. If you are interested in refinancing your USDA mortgage, this program may be right for you.

USDA Streamline Assist Guidelines

The USDA program helps homeowners in rural areas lower their monthly mortgage payments. To be eligible for the Streamlined Assist Refinance Loan, you must meet the following guidelines:

The new loan amount cannot exceed the current principal balance plus any allowable fees and costs associated with the loan.

  • 30-year fixed loan term only. 15-year or 20-year loans terms are not available
  • A $50 net reduction to principal, interest, property taxes, and homeowner's insurance (PITI) payments in comparison to current PITI.
  • All original borrowers must remain on the note. It's possible to add new borrowers to the loan.
  • All USDA-backed homes that are currently in a flood zone must have flood insurance.
  • Borrowers must meet the current USDA household income limits.
  • No appraisal requirement for most borrowers. There is an exception for current USDA Direct Loan applicants.
  • Debt-to-income ratio (DTI) not required
  • Properties that are no longer in a rural area that qualifies can still be refinanced.
  • The Borrower can not have any late payments within the past 12 months
  • The refinance may include the principal loan balance, interest that has already been paid, the upfront guarantee fee, and other eligible loan closing costs.
  • You must be current on your payments for that loan. You must have a current USDA loan.
  • You must have made your last 12 payments when due.

If you meet all the guidelines above. You can lower your monthly payment by refinancing through this program. The interest rate on your new loan will be lower than your current interest rate, which can save you money every month.

If you're interested in learning more about the Streamlined Assist Refinance Loan, contact one of the lenders below.

What are the Benefits of a USDA Streamlined Assist Refinance Loan?

The USDA Streamlined Assist Refinance Loan offers many benefits to homeowners. Perhaps the most appealing aspect of this loan is that it requires no appraisal. In addition, there are no minimum credit score requirements, so even those with less than perfect credit may qualify.

If you're a homeowner with a USDA loan, you may be able to take advantage of the USDA streamlined assist refinance loan. This program can help homeowners lower their monthly payments.

Homeowners must currently hold a Direct USDA loan or a USDA 502 guaranteed mortgage to be eligible for the rural refinancing program.

No Credit Check Needed.

A key benefit of this type of loan is that there is no credit examination required. This can save you time and money in the application process.

No Out-of-Pocket Costs.

Rural homeowners may use the USDA Streamlined Refinance Loan to not only cut their monthly mortgage payments, but also to roll in all closing and escrow expenses into the new loan. This loan, like other USDA rural housing loans, is subject to a 1% upfront cost and a 0.35 percent yearly fee.


Negative Equity is Not a Problem

It shouldn't be a problem to have negative equity. The program helps homeowners who are having trouble making their monthly mortgage payments. There is no need for a new appraisal or credit check. Negative equity means the current loan balance is higher than the market value of the home.

The USDA Streamlined Assist Refinance Loan is available to any borrower who currently has a USDA loan and meets the current USDA household income limits.

Closing Costs on USDA Streamlined Refinance

Closing cost graphicIf you're considering a USDA Streamlined Refinance Loan, one thing to keep in mind is that there are no upfront or ongoing costs associated with the loan.

However, there are some closing costs that you'll need to pay in order to get the loan. Closing costs can be included in the new loan. Here's a look at what you can expect to pay in closing costs:

Application fee: This is a one-time fee that you'll pay when you submit your application for the loan. Varies from lender to lender.

Appraisal fee: An appraisal is not required unless the current mortgage is a USDA Direct Loan and received a subsidy.

Guarantee Fee - 1% of the loan amount is paid to the USDA to partially reimburse lenders with defaulted mortgages.

Title search and insurance: A title search and insurance policy will need to be obtained in order to protect your investment. The cost of these services can vary.

Origination point(s): Origination points are fees charged by the lender for processing the loan. These fees can vary, but are typically around 1% of the loan amount.

Other miscellaneous fees: There may be other miscellaneous fees associated with getting a USDA Streamlined Refinance Loan.

Who is Eligible for a USDA Streamlined Assist Loan?

There are a few qualifications you need to meet in order to be eligible 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.

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. 

Real Estate Tax and Insurance Escrow Requirements

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

Streamline Assist Income Limits

Income tax graphicThe borrower's adjusted yearly income may not exceed the Rural Development limitation for the area.

Refer to the USDA Property and Income Eligibility website.

The USDA requires complete income verifications/documentation for all adult household members and borrowers.

What are the downsides of a USDA streamline?

The primary disadvantage of the USDA Streamline are the guarantee costs. Similar to mortgage insurance, they are paid up front and on a yearly basis. Unlike conventional and select Federal Housing Administration (FHA) loans, USDA loan guarantee costs persist for the duration of the loan.

This is in contrast to traditional loans, which do not need mortgage insurance if you have at least 20 percent equity in your house. For this reason, a traditional loan may be preferable, particularly if you find yourself accumulating equity over time.

Another disadvantage of the streamline program is that it does not allow cash back to the borrower. This means that if there is sufficient equity in the house you are not allowed to borrow a little extra.

And finally, the only available term is 30 years. A 15 year term is not available. But with the savings with the streamline assist program, you can make extra payments each month. Use our amortization calculator to see how an extra payment can pay off your mortgage quickly.

Rotating question markQuestions and Answers about the USDA Streamline Loan Program

Q. Are there debt or income ratios?
A. No debt to income ratios are required.

Q. Can I use the Streamline Assist program even if I rent the house?
A. No, when filing for a USDA streamline refinance, all borrowers on the original loan must be living in the property.

Q. Can I borrow more money for home improvements?
A. No

Q. What is a Standard Streamline Refinance?
A. The Standard Streamline Refinance Program is siimilar to the Streamline Assist, but is a tad more restrictive. Read more

Read more about USDA loans with our questions and answers page

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.