How long must the existing loan be closed before applying for a USDA streamline refinance?

The correct duration required for an existing loan to be closed before applying for a USDA streamline refinance is indeed 12 months. This requirement ensures that the borrower has established a reliable payment history on the existing loan and demonstrates the ability to manage mortgage obligations efficiently. The USDA streamline refinance program is designed to facilitate refinancing for borrowers looking for lower interest rates without the need for extensive documentation and underwriting processes.

Requiring the loan to be closed for at least 12 months helps to mitigate risks for lenders while also assisting borrowers by offering them potentially more favorable loan terms based on their improved financial situation. This time frame reflects the USDA's intention to support sustainable homeownership while ensuring that the borrowers are not at immediate risk of financial instability when they enter the refinancing process.