The USDA has announced a great opportunity for homeowners with a rural development mortgage. This zero-down mortgage option is great for first time home buyers because of the 100% financing. With homeowners who went this route a few years ago, interest rates were decent - in the 8% range - but those rates have fallen near 4% now. The only problem is that in that same time period, home values have dropped so refinancing is difficult with no equity. Enter the rural development refinance program.
On Thursday May 31, the Deputy Undersecretary for Rural Development Doug O'Brien traveled from Washington, D.C. to Portage, Michigan to announce this program. Because AmeriFirst Home Mortgage is the leading lender for USDA rural development in Michigan, the announcement was made at the AmeriFirst headquarters. Michigan's Rural Development Director James Turner and several other USDA staff members joined in on the announcement, as well as staff from Senator Debbie Stabenow's office.
The point behind this program is to help those homeowners with an RD loan - who have kept up with their payments despite falling values - to refinance their mortgage into a lower interest rate. This will lower their house payment, putting cash directly into their budgets. Because this refi option doesn't require an appraisal, the value of the home is not the focus. Instead, the homeowners credit score, income and employment are the deciding factors.
MLive reporter Al Jones published an article on the event. In it, he quotes O'Brien as telling him, "Right now, the typical situation is that if you're underwater — and if you don't have equity — you can't refinance. The pilot program is making sure that homeowners who are playing by the rules have that option. In Michigan that mean almost 25,000 people are eligible for the program."
On the other side of this news, is the fact that USDA rural development can help buyers all over with the option of a zero-down mortgage. You can finance 100% of the home purchase with this mortgage option, as long as you meet the credit requirements and the home falls into the geographical parameters. Surprisingly, the definition of rural is actually pretty open. Many "bigger cities" have neighboring communities that fall into this category.
Learn more about the USDA rural development option with fact sheets. And if you're interested in refinancing through this program or HARP 2, let us know. Our mortgage consultants want to help responsible homeowners find better rates and save money.