A borrower refinances their existing FHA loan with a current balance of $180,000 through the FHA Streamline Refinance program. The new loan amount after refinancing is $185,000. How is the annual MIP calculated for this loan?
Correct Answer
C) Based on the current unpaid principal balance
For FHA Streamline Refinances, the annual MIP is calculated based on the current unpaid principal balance of the existing FHA loan being refinanced, not the new loan amount. This is a special rule that applies specifically to streamline refinances to encourage borrowers to take advantage of lower rates.
Why This Is the Correct Answer
For FHA Streamline Refinances, the annual MIP is calculated based on the current unpaid principal balance of the existing FHA loan being refinanced, not the new loan amount. This is a special rule that applies specifically to streamline refinances to encourage borrowers to take advantage of lower rates.
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