Did you know that you may be entitled to an FHA mortgage insurance refund if you refinance your home within three years of opening your FHA loan?
When you get an FHA loan, you pay a mortgage insurance premium at the time of closing. This initial premium is the “upfront mortgage insurance premium,” also called UFMIP or MIP.
But this fee is refundable if you refinance into another FHA loan. This benefit gives borrowers a discount when they refinance with the FHA streamline refinance loan.
Click here to get a free, no obligation FHA streamline rate quote.
The borrower’s FHA MIP refund is reduced by two percentage points for each month after the initial FHA loan closing date. Take a look at this chart to determine the refund you may receive.
|
Months Closing |
MIP |
Months Closing |
MIP |
Months After Closing |
MIP refund |
|
1 |
80% |
13 |
56% |
25 |
32% |
|
2 |
78% |
14 |
54% |
26 |
30% |
|
3 |
76% |
15 |
52% |
27 |
28% |
|
4 |
74% |
16 |
50% |
28 |
26% |
|
5 |
72% |
17 |
48% |
29 |
24% |
|
6 |
70% |
18 |
46% |
30 |
22% |
|
7 |
68% |
19 |
44% |
31 |
20% |
|
8 |
66% |
20 |
42% |
32 |
18% |
|
9 |
64% |
21 |
40% |
33 |
16% |
|
10 |
62% |
22 |
38% |
34 |
14% |
|
11 |
60% |
23 |
36% |
35 |
12% |
|
12 |
58% |
24 |
34% |
36 |
10% |
As an example, you purchased your home 15 months ago and paid an upfront mortgage insurance premium of $1,750. If you refinance now, you may be eligible to receive 52% of that amount back, or $910. So how do you request this refund? Keep reading.
Click here for a fast and free FHA streamline rate quote.
FHA Mortgage Insurance Premium Refund Fast Facts
Here’s a few good things to know about FHA MIP refunds:
- When doing an FHA to FHA refinance, your refund will be applied to the upfront mortgage insurance premium on the new loan.
- MIP refunds are available for an FHA streamline refinance after the 7-month waiting period required for these loans.
- MIP refunds are available for FHA streamline refinances that do not qualify for reduced upfront mortgage insurance premiums (see explanation below).
- FHA mortgage insurance refunds are available for FHA loans opened less than 3 years ago.
- Assumed FHA mortgages are not eligible for an MIP refund.
- You must refinance into another FHA loan to receive an MIP refund.
- FHA MIP refunds are available only if you have not entered into foreclosure or been seriously delinquent on your payments.
FHA Refunds when Refinancing into a new FHA Loan
A mortgage insurance refund may be owed to you if you refinance. The first requirement is that the refinance must close and fund by the end of the 36th month after the current FHA loan was opened. If the FHA refinance loan closes after that period, you will not receive an FHA MIP refund.
When refinancing from an FHA loan to a new FHA loan and there is a refund due, the refund is typically applied to the new upfront mortgage insurance premium taken out with the new FHA refinance.
Let’s look at this example:
›Your original upfront mortgage insurance premium was $2,500
›Of that amount, the refund owed to you is $1,500
›The FHA MIP on the new loan is $2,000
›You will only have to pay $500 of the new upfront mortgage insurance premium because $1,500 of it was paid for by your refund.
Am I Eligible for a Cash Refund?
Cash refunds are not available for loans opened after December 8, 2004. For loans opened before this date, a refund may be available if the loan was open less than five years.
If you believe you are entitled to a refund but have not received one, you have six years to make a claim. For more information on claiming an FHA refund contact HUD and via their site: “Does HUD Owe You a Refund?”.
HUD Mortgage Insurance Refund Contact
HUD has set up a Mortgage Insurance Premium Refund Support Service Center where you can ask questions about mortgage insurance refunds. This phone number is 1-800-697-6967, or you can email sf_premiums@hud.gov.
FHA Streamline Refinances and Mortgage Insurance Refunds
FHA streamline refinances opened before June 1 2009 may qualify for a reduced upfront MIP of 0.01%. In this case, no FHA MIP refund is available since the refund would be bigger than the UFMIP cost.
Usually you’ll come out ahead. The typical upfront mortgage insurance is 1.75% of the new loan amount, and the reduced premium is .01%. That’s a savings of 1.74% of your loan amount, or $3,480 on a $200,000 loan. Typically, the savings from the reduced premium are greater than any refund you would have received.
You will not be eligible for an FHA streamline until you have made 6 payments on your current FHA loan and at least 210 days have passed since closing.
Click here to check FHA streamline refinance mortgage rates.
Apply for an FHA Refinance before your Refund Expires
Many home buyers purchased a home less than three years ago at a higher rate than is available now. If this is you, it may be good to refinance with a new FHA loan before your refund expires. Get an FHA streamline rate quote get started on reducing your rate and payment.
