Refinancing an HECM with an HECM
The normal upfront Mortgage Insurance Premium (MIP) on an HECM is .5% of the maximum claim amount on the low end. And, up to 2.5% of the maximum claim amount on the high end. (The maximum claim amount is the lesser of the home’s value or the County’s lending limit). If an HECM is being refinanced, HUD gives a credit for the upfront MIP paid on the existing loan.
For example, if the existing loan’s claim amount was $150,000, its original upfront MIP was $3,000. If the new loan’s claim amount is $200,000, normally upfront MIP would be $4,000, but, after the $3,000 credit from the existing loan, the new loan’s upfront MIP is reduced to $1,000.
To do an HECM refinance, you need to obtain the following information about the current (existing) HECM from your servicer: the original maximum claim amount, current principal limit, and current payoff amount (balance due).