For refinancing USDA offers the following program:
The United States Department of Agriculture (USDA) Rural Development (RD) is now offering the opportunity for current USDA Section 502 Direct and Guaranteed borrowers to refinance their existing USDA loans through the recently announced Rural Refinance Pilot program. The Rural Refinance Pilot program allows borrowers in 19 states to take advantage of the historically low interest rates with reduced documentation requirements. Nova Home Loans is supporting this program and the following are some of the guidelines
- Does not require a new appraisal.
- Mortgage must have been current for the previous 12 months.
- Borrowers must have a minimum of 640 credit score.
- The interest rate on the new loan must be a minimum of 1.00% lower than the existing USDA loan.
- Pilot states: AL, AZ, CA, FL, GA, IL, IN, KY, MI, MS, NV, NJ, NM, NC, OH, OR, RI, SC and TN.
- All Rural Refinance Pilot loans must be manually underwritten.
- The new term of the refinance loan must be 30 years.
- The upfront USDA guarantee fee will be 1.50%.
- The applicable Annual Fee will be .30%.
- The new loan may only include the principal balance of the existing loan plus the upfront guarantee fee (accrued interest, prepaid interest, closing costs, and funds required to establish an escrow account may not be financed into the new loan).
- No cash out is permitted.
- Reasonable and customary closing costs and other fees may be collected from the borrower by the originating lender. However, the origination fee charged to the borrower may not exceed one percent of the total loan amount. As a reminder, none of these charges may be financed into the new loan amount.
- Income verification for all adult household members is required for income eligibility determination. Household income is necessary for determining program eligibility only, not for determining repayment ability. Therefore, ratio waivers are not required.