USDA Guidelines & Rules

Rules on USDA Refinances

January 31, 2011 at 8:04 am By

The USDA recently authorized the issuance of Conditional Commitments for GRH Refinance transactions. The Guarantee Fee will be 1% until further notice. Funding for refinance transactions will be available next week, until then Conditional Commitments will be issued “subject to”.
Below you will find some notes regarding USDA refinance transactions.
· Limited to refinancing existing Rural Development loans only.

· Fixed interest rate below the current rate. Must offer monthly payment savings.

· A 1% Guarantee Fee. This can be financed in the Loan Amount for 101.% LTV.

· A new appraisal is NOT required when refinancing only the unpaid principal on an existing GRH loan with the 1% guarantee fee. However, a new appraisal is required when refinancing interest and closing costs (including pre-paid expenses), are included in the new GRH loan.

· No property inspections required!

· Adjusted income limits and repayment ratios are the same as for an initial GRH loan.

· No cash back (except for fees and costs paid out of pocket by the borrower, such as credit check and/or appraisal). The applicants may receive any escrow refund from the old loan.

· Property must be owner occupied.

· No cash back. The applicants may receive any escrow refund from the old loan.

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