Are you looking to calculate a refund for your mortgage insurance? Whether you want to understand how much you can expect to get back or you’re simply exploring your options, this guide will walk you through the process step by step. Let’s get started!

How is mortgage insurance refund calculated?

Calculating a refund for mortgage insurance involves a straightforward formula. The amount you are refunded depends on the time that has passed since you obtained your mortgage and the type of mortgage insurance you have. Generally, there are two types of mortgage insurance: upfront mortgage insurance premium (UFMIP) and annual mortgage insurance premium (MIP).

  • UFMIP Refund: For UFMIP, the refund amount is based on a decreasing scale over the first 84 months of your loan term. The earlier you cancel your mortgage insurance, the higher refund amount you can expect.
  • MIP Refund: MIP refunds, on the other hand, are calculated on a per diem basis. You will receive a refund for any unused days of MIP coverage when you cancel your mortgage insurance.

How to calculate UFMIP refund:

Calculating the refund for upfront mortgage insurance premium requires a few simple calculations. Here’s how you do it:

  1. Determine the age of your mortgage loan in months since the settlement date.
  2. Refer to the UFMIP refund schedule provided by the Department of Housing and Urban Development (HUD) to find the applicable refund percentage for your loan age.
  3. Multiply the original UFMIP amount by the refund percentage to get your refund amount.

Remember, the UFMIP refund is only applicable for mortgages endorsed before June 3, 2013.

How to calculate MIP refund:

Calculating the refund for annual mortgage insurance premium is a bit different. Follow these steps to calculate your MIP refund:

  1. Determine the number of unused days of MIP coverage by subtracting the cancellation date from the renewal date.
  2. Divide the annual MIP premium by 365 to get your daily MIP cost.
  3. Multiply the daily MIP cost by the number of unused days to calculate your refund amount.

It’s important to note that MIP refunds are only applicable if you cancel your mortgage insurance within the first 7 years of the loan term.

Final Thoughts

Calculating a refund for mortgage insurance doesn’t need to be overwhelming. By understanding the refund calculation methods for both upfront mortgage insurance premium (UFMIP) and annual mortgage insurance premium (MIP), you can determine the amount you can expect to receive. It’s always recommended to consult with your lender or a certified professional to ensure accurate calculations tailored to your specific mortgage terms.

Knowing your refund amount can give you a clearer picture of your financial situation, and potentially help you make more informed decisions regarding your mortgage insurance. We hope this guide has provided some valuable insights into calculating refunds for mortgage insurance!

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