Why is my PMI increasing on a FHA Streamline refinance?

An FHA Streamline refinance simply allows you to refinance your existing mortgage without income and asset verification and doesn’t by itself cause your Private Mortgage Insurance (PMI) to increase. However, there could be a number of factors that could cause PMI to increase when you are refinancing your underlying loan.

Most PMI policies require the borrower to pay monthly. Borrowers also have the option of paying for mortgage insurance with a large upfront payment.

On top of the fee you pay when you close the loan, there are annual fees as well. PMI fees vary from around 0.3 percent to about 1.5 percent of the original loan amount per year, depending on the size of the down payment, the amount of equity (and whether you are upside down or not), the loan-to-value ratio, and the borrower’s credit score.

There are two different kinds of premiums, and they are both determined in different ways.

  • The upfront MIP is generally the same for most borrowers, across the board.

  • The annual MIP varies based on several factors, including the amount being borrowed and the loan-to-value (LTV) ratio.

The upfront premium is pretty straightforward. Most borrowers who use the FHA loan program to buy a house will end up paying 1.75% of the base loan amount for their upfront MIP.

It is possible that when you refinanced, the interest rates were lower but the mortgage insurance rates went up. You can always ask your lender directly for clarification on payments.

- Moore