An FHA refund is a refund that is given on an FHA-insured mortgage loan. Many factors determine whether one will receive the refund. One of those cases is when you finance your home within three years from the beginning of the loan period. This means that they are available for loans that were opened less than three years ago. You will become ineligible to get the FHA refund if the refinance loan closes after this period is over.

People usually pay a mortgage premium when they get an FHA loan. This premium is known as the upfront mortgage insurance premium. It is abbreviated as MIP/UFMIP. This fee becomes refundable to you if you refinance another FHA loan. This is because it allows borrowers to get a discount when they choose to refinance the loan.

You must first refinance another FHA loan for you to receive a MIP refund. You will be ineligible to receive the refund when you miss payments or if you enter into foreclosure. This means that you have to be consistent and faithful when making your premium payments. Defaulting on mortgage payments will automatically render you ineligible for the refund. This is because the refund is applied to the upfront mortgage insurance premium that you will pay on the new loan. The refund reduces by two percentage points for each month after the closing date of the initial loan. The period for claiming the refund is six years. No refund will be issued upon the expiry of the period.

You will not receive the refund if there are reduced upfront mortgage insurance premiums when you refinance into an FHA streamlined loan. The refund acts as a discount on the new loan. You are already guaranteed one when you are offered a reduced upfront mortgage premium. The MIP refund is available for FHA streamline to refinance loans after the mandatory period of seven months is over.

FHA streamline refinances that were opened before the first of June 2009 are entitled to a reduced MIP of 0.01%. Borrowers will not receive a refund in this case since the refund would exceed the cost of the upfront mortgage premium. This has many advantages because the average percentage of the upfront mortgage insurance is around 1.70%. One will save a few thousand dollars that are more than the refund that they would have gotten. One qualifies for an FHA streamline after making six payments on the current loan. He also qualifies if 210 days have elapsed since the closing of the loan. You could check to see if the rates have dropped since then in case you bought a home less than three years ago. Refinancing with an FHA loan could get you a refund and better rates on loan if this is the case.

The insurance contract remains intact when a home is sold by assumption. No refund is awarded. The owner will be entitled to a refund when the insurance is terminated. The next question is whether you will receive a cash refund. Cash refunds were made available on all the loans that opened after 2004. One could receive the cash if the loan was open for less than five years. Checking if you qualify for a refund is as easy as checking the list that the Department of Housing and Urban Development (HUD) maintains. Having your FHA case number will make it simpler and faster for your request to be processed.

The department has also hired a company that contacts homeowners. One has to pay finding fees to tracers who offer to check whether you are entitled to a refund. The team employed by HUD will not charge you, and anyone that charges a fee is third-party. It is no longer necessary for you to pay a fee to get your refund despite the fact that these third-parties are legal. The HUD usually sends a check within a couple of days. It is important to confirm with them. It is advisable to check in with your mortgage provider to see whether they have contacted the HUD if you do not receive one within 45 days after paying the loan. You should be very keen at observing the information discussed before you claim a refund.