Are you interested in refinancing a USDA loan? There are certain guidelines that you need to be aware of in order to take this step. The first step of refinancing a USDA loan is having a USDA loan. You are not allowed to refinance into a USDA loan if you do not currently have a USDA loan. Refinancing a current USDA loan can be a speedy and painless process, considering the fact that there is no property inspection required.
Additional USDA Refinancing Requirements
You must already have a USDA loan in order to refinance.
You must have a current and valid USDA loan.
Your refinanced USDA loan must include a lower interest payment as well as a lower monthly principal.
Cash out is not permitted.
Technically, there is no set “maximum” amount of money that you are allowed to take out with the USDA loan program, although the amount in which you are allowed to take out all depends on your debt ratios. What this boils down to is that your new mortgage payment may not exceed 29 % of your gross monthly income, nor is your total debt ratio allowed to surpass 41 %.
You also must make sure that your total monthly income meets the “maximum allowable” criteria. Your loan officer can find out this information for you with ease, necessary because the criterion varies by location.
The USDA refinanced loan is subject to income requirements, as well as debt to income requirements. With this being taken into consideration, the maximum financing available is 102 % of the home’s appraised value. While USDA currently allows 102 %, this number is capable of rising, though this information has not been released at this point.
If you are seriously considering refinancing a USDA loan you should be sure to work with a USDA loan expert. There are quite a few key variations between the USDA loan program and a traditional mortgage, and it is vital to be aware of these differences.