Did you know that the Federal Housing Administration(FHA) insured loan that you have may be refunded to you if you refinance your home within three years? Many homeowners are unaware that they can be saving lots of money by refinancing their homes.
It’s not too complicated. When closing on a house, you will pay a mortgage insurance premium(MIP). This will get you an FHA loan. However, this MIP fee is refundable if you refinance your home into another new FHA loan. Your MIP refund will begin at 80% and is then reduced by 2% after every month for the next three years.
Be sure to check how much your rebate would be because you could be saving a lot of money if you refinance soon. Even if it’s just been over a year, you’re eligible for around a 50% refund. How do you access this refund correctly? Let’s explore your options as a homeowner.
Refinancing Into A New FHA
Remember, the only way to receive an FHA refinance loan is if you close the finance by the 36-month mark. If the FHA loan closes after three years, then you will not be able to access any of the refunds. Even in the last month you’re still eligible for a 10% refund so don’t feel it is too late.
Okay, when you refinance from a previous FHA loan to the new FHA loan, you’ll receive a refund, right? Well, not always, typically the return gets applied to the new upfront MIP taken out with the new FHA refinance. When the return has applied that means if you owe $2,000 on your new MIP and the refund is $1,600, then you will owe $400 for the new MIP.
If you purchased your home less than three years ago at a higher rate than it is now then refinancing might be an excellent way to earn some money back. This can be a great way to reduce your rate and payment, so don’t wait for your FHA loan to expire!
Any streamlined refinances started before June 1st, 2009 may be eligible for a reduced Mortgage insurance premium of 0.01%. If this is you, then you would not qualify for an FHA refund.
With streamline refinance you’ll come out winning. Yeah, I know, 0.01% might not seem like a lot but image your 1.85% insurance loan dropping to 1.84%! Still doesn’t look like a lot? Well let’s say your loan is $200,000, then with 1.84%, you’ll be saving $3,680 now. Remember any money that can be saved is worth keeping, always.
What to Keep In Mind
- Assumed Federal Housing Administration mortgages are not qualified for a Mortgage insurance premium refund.
- FHA mortgage insurance refunds are only available for FHA loans started less than 3-years ago.
- To receive a MIP refund it is required to refinance into another FHA loan
- FHA MIP refunds are accessible only if you have not entered into foreclosure or been severely overdue on your payments.
- Doing an FHA to FHA refinance, your refund will be used on the upfront new MIP loan.
Take action on your FHA loan and get the money back that’s available. Any money you save can go towards your new FHA loan after refinancing. Why wait when it comes to saving?