When considering your FHA home loan refinance options, there’s a list of common questions many borrowers need answers to before deciding on the right FHA refinance loan. One such question involves the state of the current mortgage before the new loan is approved. Can a borrower skip a payment on an FHA or conventional mortgage as the new FHA refinancing loan is approved?
FHA loan rules address this issue in HUD 4155.1, Chapter Three, Section A. It says:
“The borrower must be current on the loan being refinanced for the month due prior to the month in which he/she closes the refinancing, and for the month in which he/she closes.
Example: If the borrower is closing on April 8, he/she must have made the March payment within the month of March, and the April payment by closing. The April payment may be included in the payoff amount at closing.”
What if the lender is willing to permit the borrower to skip a payment on the old loan? If the lender is willing, is there any way to permit this to occur? According to Chapter Three, “Lenders are not permitted to allow borrowers to “skip” payments when refinancing. When the new mortgage amount is calculated, FHA does not permit any mortgage payments “skipped” by the borrower to be included in the new mortgage amount.”
There are two basic options: FHA loan rules state that the borrower must either “make the payment when it is due, or bring the monthly mortgage payment check to settlement.”
This is an important rule to keep in mind when budgeting for your FHA refinance loan–it’s a bad idea to assume it’s possible to skip payments, include certain fees or expenses in the loan amount or other issue common to some types of refinancing.
FHA loan rules can and do vary from VA mortgage loan requirements and conventional loan rules. Discuss your needs with the lender when in doubt or contact the FHA directly at 1-800 CALL FHA for assistance with your specific needs.
Do you have questions about FHA home loans? Ask us in the comments section. You can apply or get pre-approved for an FHA loan at FHA.com, a private company and not a government website.