FHA loans · Guide

FHA Refinance Glossary: Terms You Will See

Plain-language definitions of the terms that come up most often in FHA refinance paperwork.

  • Reading time2 min
  • Official sources2 cited
  • Updated
  • Last reviewed

Plain-language definitions of the terms that come up most often in FHA refinance paperwork. Work through each part below with your own numbers and documents, and keep notes as you go.

Quick answer

The upfront mortgage insurance premium is charged at closing and is usually financed. The annual premium is collected monthly. When you refinance an FHA loan into a new FHA loan within a set period, part of the earlier upfront premium may be credited, as HUD describes in its guidance.

Key takeaways

  • A streamline refinance usually reduces documentation and may not require an appraisal, but limits cash to the borrower. Streamline versus rate-and-term
  • For streamline refinances, HUD requires that the new loan provide a measurable benefit, such as a reduced combined rate or a move from an adjustable to a fixed rate. Net tangible benefit
  • Seasoning refers to how long you must have had the current loan and how many payments you must have made before refinancing. Seasoning and payment history

Upfront and annual MIP

The upfront mortgage insurance premium is charged at closing and is usually financed. The annual premium is collected monthly. When you refinance an FHA loan into a new FHA loan within a set period, part of the earlier upfront premium may be credited, as HUD describes in its guidance.

Streamline versus rate-and-term

A streamline refinance usually reduces documentation and may not require an appraisal, but limits cash to the borrower. A rate-and-term refinance with full underwriting includes a credit and income review and an appraisal. A cash-out refinance lets you take equity and has its own occupancy and seasoning rules.

Net tangible benefit

For streamline refinances, HUD requires that the new loan provide a measurable benefit, such as a reduced combined rate or a move from an adjustable to a fixed rate. The lender documents how the refinance meets this test.

Seasoning and payment history

Seasoning refers to how long you must have had the current loan and how many payments you must have made before refinancing. Payment history rules limit recent late payments. Exact requirements are in HUD Handbook 4000.1 and can change through Mortgagee Letters.

Sources

Sources reviewed . General education only; confirm current rules with official sources and a licensed lender.

Explore related topics