New USDA Refinance Program – Relief for Homeowners

The new United States Department of Agriculture (USDA) pilot refinance home loan program could help tens of thousands of rural homeowners in 19 states. The new refinance program, which was first announced Feb. 1, allows “underwater” or “upside down” homeowners in rural areas to refinance their homes with lower interest rates, similar to a program the President announced earlier this month — although the USDA’s program does NOT rely on the approval of Congress.  “We’ve already obligated this money,” Agriculture Secretary  Vilsack said.  Refinancing has been difficult for many FL homeowners because they owe more on their home than what it’s worth. The new rural development refinance program will permit this.

To be eligible for the new USDA rural refinance program, Florida homeowners must already have either a direct loan with the USDA or a USDA guarantee mortgage.  This is important, you must currently have a USDA housing mortgage. If you have a conventional loan or FHA loan there are different options.

Side note – for Florida homeowners that have a conventional loan  - you can learn more about the Home Florida Home Affordable Refinance Program (HARP 2.0) by clicking here.  The FL HARP refi home loan program is officially set to be released in spring 2012. This new version of HARP ( know as HARP 2) will allow unlimited loan to value which is the most significant change – so no more restrictions on how much a homeowner is “under water” on their mortgage.

USDA officials say the new program will cut through red tape normally seen with bank refinancing and save borrowers hundreds of dollars a month. To be eligible, borrowers must have made their mortgage payments on time for 12 consecutive months. There are more than 20,000 borrowers eligible in Florida and some 237,000 nationwide, according to the USDA, all in rural areas. “We’re trying to make this as easy as possible,” the Agriculture Secretary said. He said that if more underwater loans are refinanced, then fewer homeowners will face foreclosure.

“This will preserve not only an opportunity for these families to save a little money, but it will preserve the value of neighborhoods, also,” he said. Under the new pilot refinance loan program, a homeowner could knock three or four percentage points off their mortgage interest rates if they refinance — and they wouldn’t have to go through an appraisal, inspection or credit report.

Similar to the Federal Housing and Urban Development, the USDA does make and guarantee home loans, only for those living in rural areas. The USDA agency has facilitated about 465,000 home loans nationwide. In contrast, Obama’s housing proposal faces a major hurdle in Congress. The program would cost between $5 billion and $10 billion, depending on participation, and the administration proposes to pay for it with a fee on large banks.

Requirements of the new USDA Rural Refinance Pilot program include:

  • The borrower must currently have a USDA mortgage – very important. There are different refinance relief programs for homeowners with conventional or FHA home loans.
  • No mortgage late payments in the last 12 months.
  • Mobile or Manufactured home are not permitted.
  • Pilot States: AL, FL, GA, IN, MI, NC, and TN. We currently only offer Florida.
  • The new term of the refinance must be 30 years fix mortgage.
  • The upfront USDA guarantee fee will be 1.50% which will be roll into ( or financed) in the new loan ( Currently 2% for USDA purchase loans)
  • The applicable USDA annual/monthly fee will be .30%
  • The new loan may only include the principle balance of the existing loan plus the upfront guarantee fee of 1.5% and ALL closing costs.
  • No cash out is permitted with this refinance program.
  • Income verification for all adult household members is required for USDA income eligibility only, not for determining repayment ability. Current USDA household income limits can be found here
  • Borrowers must be employed at the time of closing on the refinance transaction or have alternate sources of income, such as: retirement income, social security income, disability income, alimony, or child support.
  • The loan to value (LTV) cap is unlimited. Home owners that are “underwater” and have had their home value decrease, not a problem

The main purpose of this is program is to help Florida’s rural residences that have done everything right, but might of lost significant equity in their home after the housing boom.  Many Florida homeowners have made their mortgage payments on time but could not take advantage of the historic low interests of today because of a deprecation in home values and equity restriction put in place by lenders. This USDA refinance program is design to help these homeowners,  regardless of how high your loan to value might be-  how much you own on your mortgage / verses the current value of your home.

Questions about 100% USDA loans here in Florida, please learn more at www.UsdaMortgageSource.com or call us 7 days a week at 904.302.6060.

Serving all of Florida including Tampa fL, Orlando FL, Ocala FL, Gainesville FL, Sarasota FL, Naples FL, Fort Myers FL, Cape Coral FL, Port Charlotte FL, Lehigh Acers FL, Collier County,

Learn more about the other Florida Home Loan programs by clicking here.

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