A U.S. Department of Agriculture pilot loan program could lower interest rates and reduce mortgage payments for more than 20,000 rural homeowners in Florida.
The program will allow underwater homeowners in rural areas to refinance mortgages at interest rates between 3.5 and 4.5 percent. Underwater mortgage holders owe more on their loans than their homes are worth.
"It puts more money into the pockets of homeowners," Agriculture Secretary Tom Vilsack said in a telephone interview. "It will also help shore up the value of homes."
President Barack Obama announced a similar program earlier this month to reduce monthly payments, but the USDA program does not rely on the approval of Congress.
To be eligible for the USDA program, homeowners must have either a direct loan with the USDA or a USDA guarantee on a commercial bank mortgage. And borrowers must have made their mortgage payments on time for 12 consecutive months.
The new program, Vilsack says, will cut through red tape normally found with bank refinancing and save borrowers hundreds of dollars each month. Banks, he said, will be willing to cooperate because homeowners would be current on their loans.
Under the new pilot program, a homeowner could knock three or four percentage points off their mortgage interest rates if they refinance and wouldn't need a home inspection, appraisal or credit report.
Borrowers would still have to meet low or moderate income limits and pay closing costs. Those costs and other fees could be rolled into the loans, Vilsack added.
Homeowners can apply immediately by calling the USDA office in Gainesville at (352) 338-3474.
Mark Puente can be reached at [email protected] or (727) 893-8459. Follow him on Twitter at twitter.com/markpuente.