The new USDA / Rural Development pilot refinance home loan program could
help thousands of rural homeowners in Florida. 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.
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
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%. Accrued interest, prepaid interest, closing costs, and funds required to establish an escrow account CAN be financed into the new loan as of 4/2012. Closing costs and pre paid escrow will generally be around 3-5% of the loan amount. UPDATE 6/20/2012 - closing costs can now be rolled into/ included into the new loan. NO out of pocket 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. Upside down on your loan? No problem..
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 St Augustine FL, Daytona Beach FL, Ormond Beach FL, Flagler Beach, Palm Coast FL, Deland FL, Deltona FL, Volusia County,
Learn more about
the other Florida Home Loan programs by clicking here.