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  • The government is assisting rural home owners to refinance their mortgages through a pilot program of the United States Department of Agriculture, USDA. This program is designed for rural owners who don’t qualify for a commercial refinance loan but wish to benefit from the low interest rates now available. This is a new program, so if you did not qualify for mortgage assistance through previous USDA programs, you may qualify for this one.

    The program will convert the mortgages of borrowers under the Single Family Housing Direct and Guaranteed program into new Guaranteed loans with improved terms. Notice this program only allows borrowers to refinance the balance of their existing mortgage and the one time guarantee fee charge, which works as a type of mortgage insurance. You cannot use this refinance program as a cash-out refinance or a way to increase the balance on your mortgage to remodel your home or finance some other project.

    Unfortunately, this program is only available to borrowers who already have a mortgage guaranteed by the USDA for a minimum of 12 months. This also means you cannot add new borrowers to a guaranteed mortgage, all the borrowers must be part of an existing guaranteed loan.

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    The good news for unemployed workers is that employment is not a requirement to qualify for the Rural Refinance Pilot program. As long as you have a good mortgage payment history for the last 12 months, you are eligible. However, if you have been employed in the last 12 months, you must provide proof of previous earnings, which will be used to calculate total income and determine eligibility.

    Another great feature of this mortgage program is that borrowers with a bad credit history will still qualify as long as their mortgage payment history is good. For example, as long as you have been regular with your mortgage payments in the last 12 months, late payments for credit cards, car loans or other debts, you will still be eligible.

    Successful applicants of the Rural Refinance Program will see their mortgage’s interest rates drop to at least 100 basis points below their current interest rate. However, mortgages with high interest rates may enjoy greater reductions in order to meet the maximum interest rate set by the program. All successful mortgages will see their terms extended to a 30-year term.

    Borrowers will have to pay lenders an origination fee. However, this fee cannot be more than 1 percent of the mortgage’s principal balance.

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