How many years can a borrower get a prorated refund of FHA mortgage insurance when refinancing from one FHA loan to another?

A borrower can receive a prorated refund of FHA mortgage insurance premiums when refinancing from one FHA loan to another for up to three years. This particular feature is designed to provide some financial relief to borrowers who decide to refinance their FHA loans within a certain time frame.

When an FHA loan is originated, the borrower pays an upfront mortgage insurance premium (UFMIP), which is generally financed into the loan, as well as monthly mortgage insurance premiums (MIP). The prorated refund applies if the borrower refinances to another FHA loan within three years. This helps incentivize homeowners to refinance and potentially take advantage of better rates or terms without completely losing the funds they've already spent on insurance.

After three years, the FHA no longer provides any refund on the mortgage insurance premiums, which means borrowers who are considering refinancing should keep this timeline in mind to maximize their savings.