Have you heard about an FHA escrow refund? Have you sold your home and paid off the FHA mortgage loan? Then you may have a refund coming. Find cool information on how you can get these monies below.
What actually is this escrow refund and why use a mortgage escrow account in the first place? First, mortgage escrow accounts have become very popular over time.
In fact, they have been found to be so useful that, in many cases, they are even mandatory.
In order to understand what escrow accounts are, you first need to understand what an escrow account is.
An escrow account is a legal contract between three people wherein a third party keeps the relevant deposits that party A may owe to party B. In simpler terms, this means that a third party will take money from you and keep it till the time is right to pay it to the person to whom you owe the money.
A lender will require this type of an account if you have more than 80% loan to value ratio or LTV. For almost all first time home buyers, if they use the FHA home loan with the minimum down payment of 3.5% you end up with a 96.5% LTV.
Since the lender and FHA are taking all
the risk because you have such a small amount of money into the
transaction, this escrow account will protect them to insure taxes,
insurance and other annual payments are made.
In the majority of situations, escrow accounts are used between an individual taking out a mortgage i.e. you and the party that you owe the money to. A mortgage escrow is like a savings account that you are required to keep and do not get any say on.
This means that your money would go into the escrow account and be held there till the due date for your payment becomes relevant. When this happens, the institution managing the escrow account (usually the lender) would disperse the payment on your behalf.
The logical question to ask here would be why a mortgage escrow account is so beneficial for you. The biggest advantage of an escrow account is that you would not have to come up with huge sums of money when the due date for the payment comes closer.
Instead, you would be putting in monthly payments that will add up to the right amount by the end of the year. Another benefit of mortgage escrow accounts for you is that you would not have to worry about remembering the payment dates because they are automatically taken care of by the institution handling the escrow account.
It is likely that you are now wondering about what happens to the money if you decide to pay off your loan sooner than scheduled. If you pay off an FHA insured mortgage before its time then you would be entitled to what is commonly known as the FHA escrow refund.
Years ago, you would have been required to file a small claims suit before you got your money back from the escrow account. Nowadays though, you can just follow the new rules put in place by the Department of Housing and Urban Development to get your money back.
In fact, you would be entitled to these monies regardless of how you have paid back the mortgage. For example, you would be entitled to the FHA escrow refund whether you have paid back the mortgage early from your own pocket or have managed to pay it back by simply selling the house. Another way this may happen is if you refinance the home.
All you would have to do to get your FHA escrow refund is to approach the Department of Housing and Urban Development through its Mortgage Insurance Premium Refund Support Service. You can just call them on their toll free number, 1–800–697–6967.
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Oct 08, 19 08:33 AM
Hello, I have a question regarding USDA vs. FHA home loans. I am in the process of getting a home in the next month but was told I wouldn't be approved
Aug 05, 19 10:44 PM
Hi Help please! I am a first time home buyer, buying a home with my fiance'. He is selling his home currently on the market for $125K with no contingencies.
Apr 15, 19 12:36 PM
When buying a home out of state, should we wait for employment contracts? Or can we use our current state's bank? Find the answers here.
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