Refinancing an HECM with an HECM
The normal upfront Mortgage Insurance Premium (MIP) on an HECM is 2.0% of the maximum claim amount. (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.
According to Mortgagee Letter 2004-18, HUD will allow a borrower to opt out of the HECM Housing Counseling Requirement if all three of the following conditions are met:
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).