When you purchase a home through an FHA lender you are required to pay an UFMIP (up-front mortgage insurance premium) on the loan. The insurance amount isn’t determined by your credit or financial stability but instead it is a flat rate across the board that is offered for all FHA loans. When FHA offers you a refund what is being refunded is part of this UFMIP. More than likely you have a few questions about this.
Who is Eligible for a Refund?
But what about loans acquired after December 8, 2004? Is there any way to get a refund? In some cases, you may be able to get a refund when you do an FHA to FHA refinance. It’s not uncommon when switching from one FHA loan to another, for the original insurance premium to be transferred from the first loan to the second. Meaning, some of the insurance costs for the new loan are already covered by your previous payment. Securing an actual refund may be possible but that would have to be discussed with HUD (United States Department of Housing and Urban Development) and the lender.
How do I Determine if I am Eligible?
Many homeowners today are starting to realize that they may be eligible for an FHA refund. To make it simple to determine whether or not they do HUD has actually created a section on their website where you can punch in your information and see if there is a refund waiting. You only need your last name or your FHA case number– it’s very simple. Once you put in the information a list will pop up with the names and addresses, as well as the refund amount, of any person that matches the criteria you enter that has a refund waiting.
I get a Refund! What Next?
Typically you are supposed to get information regarding your refund within 45 days of the sale of the property, although this has proven to not always be the case. When the information isn’t sent,t’s often a result of the mortgage company failing to cancel the mortgage insurance. Of course, if you sold your home years ago and discover that you are eligible for a refund, calling the mortgage company will be ineffective. In these cases, you need to contact HUD directly. Give them your case number and any information relevant to the loan and property and they will help you get started on the FHA refund process.
Should I Pay Somebody to Help?
FHA refunds are given directly through HUD. While there are many third party providers who are willing to help you get your refund for a fee, they are an unnecessary middle man in the process. HUD does not charge for the service of finding and sending the refund so you shouldn’t be paying anybody to help you with this either. These services being offered by third parties are not illegal but they are a waste of your money. Just skip them and go to HUD.
There are a lot of questions that may come up during the refund process. If you run into questions that you can’t answer you can contact HUD or do a bit of online research. HUD has made the refund process as basic and simple as they can and they have the resources set up to guide you through any roadblocks that can get in your way. Former FHA borrowers who think they might be due a refund can call the toll free number 1-800-697-6967, or write to HUD at P.O. Box 23669, Washington DC 20026-3699. You can even look for your name with the HUD Refund Search Form.