Important Factors on How an FHA Refund is Determined

An FHA refund is an amount of money given back based on the FHA insured mortgage loan. There are a number of factors taken into consideration in this determination. One case being when your home is financed within three years from the start of the loan process. However, the resident won’t be up for the FHA refund if the loan closed after this time period.

Most consumers pay a mortgage premium upon obtaining an FHA loan. Known as an upfront mortgage insurance premium (MIP/UFMIP), the fees are refundable if and when you refinance another FHA mortgage loan. This allows borrowers the opportunity to take advantage of a discount if they select to refinance.

For a person to receive the MIP refund, the consumer is obligated to refinance another FHA loan. If you skip payments or go into foreclosure, you’re ineligible for the refund. That’s why it’s critical for borrowers to stay consistent and timely when making your payments. If you default at any time on your mortgage payments, you will automatically be ineligible to receive the FHA refund. The reason behind the restriction is that the refund is administered to the mortgage insurance payment that you’re set to pay on the loan. This refund is reduced by two percentage points monthly after the loans closing date. You have up to six years to claim the refund. If you don’t, no refund will be given after the expiration date.

A borrower will also not receive the FHA refund if reduced upfront mortgage insurance premiums exist, and you refinance into a streamlined FHA loan. When you’re given a reduced upfront mortgage premium, you’re already guaranteed the refund. There is a mandatory waiting period of 7 months before the MIP refund is available to FHA streamline loans.

FHA streamline refinances opened earlier than June of 2009 are entitled to a 0.01 percent MIP reduction. Because the FHA refund exceeds the upfront mortgage premium expenses, a borrower is not entitled to a refund. There are many advantages to this reasoning as the typical upfront mortgage insurance percentage is approximately 1.70 percent. A borrower could save thousands of dollars more than what they would get from the refund. You could qualify for a streamline FHA after six payments are made on the current mortgage loan. Another qualification includes 210 days elapsing from the time of the closing. If you’ve purchased a home three years and under, pay attention to the rates to see if they have come down. An FHA loan refinance could garner both a much better loan rate and refund.

When a dwelling is sold by assumption no refund is awarded, and the insurance contract remains intact. Once the insurance has been terminated, the borrower is entitled to the refund. Cash refunds are available on loans opened after 2004 and for five years or less. You can check verify if you qualify for the refund by using the Department of Housing and Urban Developments (HUD) list. To make the process easy and faster, have your FHA case number handy.

HUD also has a company that will contact homeowners. Third party finding fees associated with the tracers are legal, and there may be costs associated with the work that they provide. But you don’t need to pay money in order to receive your refund. As a matter of fact, HUD will provide the assistance without charging you a dime. HUD typically sends a check within a couple days, but you need to confirm with them their timeline. You can also speak with your mortgage provider to ensure that they’ve been in contact with HUD. This is especially important if you haven’t received a check within 45 days of your loan payment.

If you’ve legally changed your name, gotten divorced or recently married, you will need to show supporting documentation for the changes. If you had a co-borrower on the loan, and they’ve died, you will also need evidence to back this. A death certificate, and the heirs birth certificates should be enough to satisfy the claims.

Before you begin the process of claiming your refund money, you should look over the above helpful information with a keen eye to ensure you fall within the proper guidelines.

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