Rural home owners in 19 states can refinance their USDA Rural Development mortgages to reduce monthly payments, even when the value of their home is less than what they owe, thanks to a new loan program from the U.S. Department of Agriculture.
The Single Family Housing Guaranteed Rural Refinance Pilot Program should help 235,000 home owners, USDA says.
To get a loan through the pilot program:
- You have to have made your mortgage payments on time for the past year.
- You don’t have to get a new credit report, property inspection, or home appraisal.
- The new interest rate must be lower than your current interest rate.
- The new loan can’t be for longer than 30 years.
- You can’t get cash at closing.
The two-year pilot is open to home owners in Alabama, Arizona, California, Florida, Georgia, Illinois, Indiana, Kentucky, Michigan, Mississippi, Nevada, New Jersey, New Mexico, North Carolina, Ohio, Oregon, Rhode Island, South Carolina, and Tennessee.
In two years, the USDA will look at how well the loans in the program perform and decide whether to continue the pilot, end it, or make the program permanent. USDA says the new program will not require taxpayer funds.
The pilot expands upon USDA’s ongoing help for rural home owners. USDA borrowers who run into financial trouble can lower their monthly payments through a loan modification that reamortizes their payments over a term of up to 40 years, lowers their interest rate, or both.
USDA also has a “Mortgage Recovery Advance” program, which helps borrowers who fall behind on mortgage payments due to job loss or other hardships.