If you have an FHA loan and are refinancing it with another FHA loan, it may be possible to get a partial refund on the MIP that you previously paid. The amount depends on how long you have had the original FHA loan. Here are some important details on the MIP refund for FHA refinances.
What is MIP?
MIP stands for Mortgage Insurance Premium. When you obtain an FHA loan, you pay both an up-front MIP and a monthly amount. The up-front MIP is charged based on a percentage of the loan amount. Monthly insurance premiums are not refundable, but the up-front MIP may be partially refunded if you refinance your loan within a certain number of years and are replacing it with another FHA loan.
Amount of MIP Refunded
The chart below shows the percentage of up-front MIP that may be refunded if you refinance within the first 3 years. The months refers to the number of months that you’ve had the loan (and not the month of the year).
For example, if you’ve had your FHA loan for only 6 months, you’re still within year one of your loan. Therefore, you would refer to row 1 and column (month) 6. According to the chart, 70% of your MIP may be refunded.
Obtaining Your Refund
Check with your loan officer regarding your MIP refund and eligibility. MIP refunds for FHA refinances may make refinancing your loan more desirable and cost effective. Most home buyers refinance in order to secure a lower rate or to access some of the equity from their existing loan. Contact me today if you are interested in refinancing your FHA loan. I would be happy to provide you with a free quote and evaluation!