USDA Guarantee Loan Refinance – USDA Loan No Closing Cost Refinance

Date: July 3, 2012

When refinancing a mortgage loan there are always costs associated with the transaction including fees that go to the lender, settlement/title/escrow office, and government recording fees. In addition, a new escrow account, which includes local and state taxes and homeowner insurance, needs to be created to handle the payment of these items as the payments come due.

To avoid having to pay these costs at the settlement table or refinance them into the new loan borrowers can opt for a USDA Loan No Closing Cost Refinance Option. By selecting this option the costs associated with the transaction are paid for by the lender when the borrower accepts a slightly higher interest rate than the current market rate.

A USDA Loan No Closing Cost Refinance Option is extremely beneficial for USDA Refinance transactions when there is limited or no equity in the value of the property. Under this circumstance the homeowner can avoid incurring the cost of obtaining an appraisal report since the USDA Streamline Refinance Loan establishes the value of the house at the original purchase price. In addition, the USDA Streamline Refinance establishes the maximum new loan amount as the current mortgage payoff. The closing costs are then paid for by the lender through a closing cost credit; thus minimizing or even eliminating the requirement that the borrower bring any cash to the settlement table.


Share |
Blog Ping