Mortgage refinancing program coming to WV
CHARLESTON, W.Va. -- U.S. Department of Agriculture officials announced they are expanding a refinancing program into West Virginia and believe it will help homeowners who are struggling to make ends meet.
The USDA Single Family Refinancing Program is moving into 15 states, including West Virginia. The program is designed to help those who have already obtained a USDA loan to purchase a home to refinance their mortgages.
The program was initially launched last year in states that were hit hardest when the housing bubble burst, said Tammye Trevino, USDA Rural Housing Programs administrator.
Now the agency has opted to expand the program because it has proven to be successful in the first states, she said.
"We believe adding these states to the program is an awesome opportunity to borrowers who are having a hard time making ends meet right now," Trevino said.
Allowing those who received a USDA home loan to refinance could end up saving families about $140 a month, Trevino estimated.
The program is designed to help homeowners who may be "under water" or have high interest rates to reduce their payments, she added.
To qualify for the refinancing program, homeowners need to have previously obtained a USDA loan to purchase their home. The borrower also needs to be current on their payments for the past year, Trevino said.
Homeowners who wish to participate in the program do not have to have their houses reappraised, no do they have to under go an additional credit check, she said.
"Most importantly, all of the closing costs can be rolled into the cost of the loan," Trevino said.
Participants cannot be above 115 percent of the median household income for the county in which they live, she added.
David Cain, Housing Program director for the West Virginia USDA office, believes the refinancing program will benefit homeowners in the Interstate 64 corridor between Charleston and Huntington and those living in the Martinsburg area in the Eastern Panhandle the most.
The median household income for Kanawha County for 2011 was $40,409, according to the U.S. Census Bureau. The median household income for Putnam County in 2011 was $53,964.
The median household income for Berkeley County, where Martinsburg is located, in 2011 was $51,029.
"We're really excited about this program," Cain said. "This is something we saw in other states that we thought people here could really benefit from."
Cain hopes eligible borrowers in the state take advantage of the program.
"Just a few extra dollars in people's pockets will really help a family," he added.
The program was launched last year in states such as Alabama, Arizona, California, Florida, Kentucky, Michigan, North Carolina and 12 other states that were hit hard by the housing market crisis.
Around 3,400 loans were refinanced in those states over the past year equaling about $453 million, Trevino said.
The federal agency opted to expand the program into states including West Virginia, Arkansas, Texas, Missouri and Montana and Puerto Rico because these regions that have a high proportion of consistently poor counties, she said.
Cain was unsure how many borrowers in West Virginia would be eligible to refinance their USDA loans.
About 235,000 USDA loan recipients in the pilot states were eligible to refinance, Trevino said. She added that she was not disappointed that only about 3,400 borrowers had taken advantage of the program in the past year.
"We would normally only refinance one-third of that number in a year," she said.
The refinancing program will not require additional funds from Congress, as it is self-sustaining and is paid for by fees levied on the loans themselves, Trevino said.
Anyone wishing to participate in the program should contact the area USDA office, Trevino said. The borrower can also contact the lending institution if they received a USDA guaranteed loan.
The USDA's guaranteed loan program is handled by lending institutions such as banks, Cain said. Refinanced loans must be 1 percent lower than the original interest rate and terms cannot exceed 30 years.