USDA To USDA Refinance - California and Hawaii USDA Mortgage Holders Have Much Too Gain By Refinancing Their Existing USDA Loan

Date: February 1, 2013

Homeowners in California and Hawaii with an existing USDA Rural Development Loan obtain a disproportionate greater benefit from refinancing their USDA Loan than borrowers in most other U.S. States. There are two underlying reason for this:

  1. Mortgage loans in California and Hawaii tend to be the highest in the United States. Lender credits that are used to pay a borrower's closings costs are based on a percent of the new loan amount. Thus the larger loan size, the greater the credit.
  2. Refinance closing costs in California and Hawaii, including the cost of re-establishing an escrow account, are amongst the lowest in the United States

Combine these two factors and California and Hawaii homeowners have a greater incentive to refinance their existing loan than borrowers in high cost settlement states, especially where loan amounts are relatively small.


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