USDA Rural Refinance Pilot Program

AAA

DEFINITION of 'USDA Rural Refinance Pilot Program'

A mortgage-refinancing option offered in some states and territories by the United States Department of Agriculture (USDA). The USDA rural refinance pilot program is available to homeowners who purchased their home using a Section 502 Direct or Guaranteed loan. These are loans made available to low-income individuals and households in rural areas.

INVESTOPEDIA EXPLAINS 'USDA Rural Refinance Pilot Program'

Homeowners looking to refinance a guaranteed loan do not need to have their home appraised, but those who have direct loans do need to have an appraisal. In addition to the principal balance, guarantee fees, accrued interest and lender fees may be included. Lenders may also charge an origination fee.

Unlike with USDA streamlined and non-streamlined refinancing, the rural refinance pilot program does not require a credit report. Instead, homeowners must show that they have made their mortgage payments for the previous 12 months. The interest rate charged on the new loan is at a fixed rate at least 100 basis points below the interest rate on the current loan.

RELATED TERMS
  1. Refinance

    1. When a business or person revises a payment schedule for repaying ...
  2. Short Refinance

    The refinancing of a mortgage by a lender for a borrower currently ...
  3. Total Annual Loan Cost (TALC)

    The projected total cost that a reverse mortgage holder should ...
  4. Forbearance

    A temporary postponement of mortgage payments.
  5. Accessory Dwelling Unit (ADU)

    A legal and regulatory term for a secondary house or apartment ...
  6. Mortgage Modification

    A permanent change in a homeowner's home loan terms that makes ...
RELATED FAQS
  1. How do I know if I should refinance my mortgage?

    The typical rule of thumb is that if you can reduce your current interest rate by 0.75-1% or higher then it might make sense ... Read Full Answer >>
  2. Can small investors buy collateralized mortgage obligations (CMOs)?

    Collateralized mortgage obligations (CMOs), which are pools of mortgage-backed securities (MBS), are available to smaller ... Read Full Answer >>
  3. What is the difference between an option-adjusted spread and a Z-spread in reference ...

    Unlike the Z-spread calculation, the option-adjusted spread takes into account how the embedded option in a bond can change ... Read Full Answer >>
  4. What are some historical examples of debt securitization?

    The first debt securities were probably sovereign debt assets that were transferred from the British government to mercantilist ... Read Full Answer >>
  5. What price-to-book ratio is considered average in the chemicals sector?

    You can use Microsoft Excel to calculate the loan-to-value ratio if you have the mortgage amount and appraised value of a ... Read Full Answer >>
  6. How can I use the correlation coefficient to predict returns in the stock market?

    Simple interest is most commonly seen in short-term loans, such as those from payday lenders or pawn shops. You might see ... Read Full Answer >>
Related Articles
  1. Home & Auto

    The Home Appraisal: Your Key to a Successful Refinance

    When you refinance your mortgage, everything hinges on the appraisal. Here's what appraisers look at, how to make your home look as valuable as possible and ways to fight back if the valuation ...
  2. Home & Auto

    4 Reasons Not To Refinance Your Home

    Interest rates are still extremely low, but they aren't expected to stay there for long. Should you refinance before it's too late? Not necessarily.
  3. Home & Auto

    6 Questions To Ask Before You Refinance

    Refinancing your mortgage can be a quick way to save on payments, but it's not for everyone.
  4. Home & Auto

    When (And When Not) To Refinance Your Mortgage

    There are both good and bad reasons to refinance. Learn more about both here.
  5. Credit & Loans

    7 Bad Reasons To Refinance Your Mortgage

    When low mortgage rates are everywhere, it might seem like a good time to refinance. Make sure you are doing it for the right reasons.
  6. Credit & Loans

    9 Things To Know Before You Refinance Your Mortgage

    Whether or not a mortgage refinance is right for you depends more on individual circumstances than this week's mortgage interest rates.
  7. Credit & Loans

    All-Time Low Mortgage Rates: Time To Refinance?

    Interest rates keep dipping lower and lower. Find out what it takes to tip the scales toward a refinance.
  8. Options & Futures

    Should You Refinance Your Mortgage When Interest Rates Drop?

    Refinancing is a great way for many homeowners to improve their financial situation - but beware of the downsides.
  9. Home & Auto

    What Are The Tax Advantages Of Buying A Home?

    Don't forget these deductions and credits that homeowners can use to reduce their tax bill.
  10. Home & Auto

    Swimming Pools: Costs Vs. Long-Term Value

    Consider the costs of installing and maintaining a swimming pool, and compare this with the pool's utility and the market value it adds to your home.

You May Also Like

Hot Definitions
  1. Moving Average - MA

    A widely used indicator in technical analysis that helps smooth out price action by filtering out the “noise” from random ...
  2. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  3. Productivity

    An economic measure of output per unit of input. Inputs include labor and capital, while output is typically measured in ...
  4. Variance

    The spread between numbers in a data set, measuring Variance is calculated by taking the differences between each number ...
  5. Terminal Value - TV

    The value of a bond at maturity, or of an asset at a specified, future valuation date, taking into account factors such as ...
  6. Rule Of 70

    A way to estimate the number of years it takes for a certain variable to double. The rule of 70 states that in order to estimate ...
Trading Center