Are You Entitled to a Refund on Your FHA Florida Home Loan?
If you’re unclear about whether or not you’re owed funds from a FHA Florida home loan, don’t bother talking to a private company over the matter. There are simple steps you can take on your own to determine if you have a refund coming your way.
The U.S. Department of Housing and Urban Development, which oversees all FHA loans, increased its research efforts three years ago to locate approximately 348,000 homeowners owed $250 million in FHA mortgage insurance refunds. However, some homeowners could not be found, typically because they had moved and the new mailing address was not in HUD’s records.
Details of a FHA Florida home loan
When homeowners pay off their FHA-insured loan within five years, a portion of the mortgage insurance upfront premium is returned. It works much like a homeowner’s fire insurance policy that’s canceled before the term expires. For example, if you pay $600 to insure your home for a year and move after eight months, a portion of the $600 would be refunded.
If you believe you are due for a refund, try to dig out your old FHA loan number and then check online or by phone. Your proper name may not be enough, especially if it’s a common one.
Lenders require mortgage insurance when borrowers apply for more than 80 percent of the purchase price of the home. It insures the investor (lender) in case the borrower defaults on loan payments. Therefor, if you sold your home and the new owner assumed the loan, you are not eligible for a refund. That’s because there is still a risk of default. The insurance follows the loan and not the initial borrower.
On older FHA loans, mortgage insurance was part of the deal and had to be paid regardless of the equity position of the borrower. Mortgage insurance on newer FHA loans - those placed after Jan. 1, 2001 - can be dropped when equity reaches 22 percent of the original appraised value and the borrower meets other guidelines.
The bottom line is that you may be owed a decent chunk of change. Take a close look at your Floirda home loan. If you feel as though a refund is in order, don’t hesitate to act on it.
