Mortgage refinance

[nomad121]

Wisconsin

Last year we refinanced our mortgage to take advantage of lower intrest rates. We have an fha first time home buyers loan thru a mortgage company based here in Wisconsin. My question is this did they essentially pay off the first loan and reloan me money at a different rate or did they just change some paperwork and issue a new intrest rate. If they paid off the first loan and reloaned me money shouldnt the original "paid off' loan been adjusted for the amount we paid as far as intrest and principal, shouldnt the amount of intrest been recalculated for essentially a shorter loan?

[HUD-1]

If you had a 7% FHA loan and refinanced to a 6% loan, your new first mortgage balance will be based on outstanding principal on the old first mortgage. The amount of interest you paid on the old loan does not enter into the calculation. You will find that due to amortization, very little of the principal balance on a loan is paid on the early years of a mortgage. (Yes, they paid off the principal on the old first mortgage with the proceeds of the new first mortgage.)

"...If they paid off the first loan and reloaned me money shouldnt the original "paid off' loan been adjusted for the amount we paid as far as intrest and principal, shouldnt the amount of intrest been recalculated for essentially a shorter loan?..."

Yes. Look on your settlement statement. It's the payoff to the old lender.