by Michael Scharfe

In my last article I had discussed some common acronyms used in the mortgage world. Although there are more acronyms that could be discussed, there are two more that are worthy of shedding some light on: PMI and MBOH.

PMI stands for Private Mortgage Insurance. PMI is arranged by the lender and is provided by private insurance companies. PMI is usually required when you have a conventional loan and make a down payment of less than 20 percent of the home’s purchase price. Additionally, PMI is generally required if you’re refinancing with a conventional loan and your equity is less than 20 percent of the value of your home. PMI associated with conventional financing will typically be cancelled from your loan once your principal balance is scheduled to reach 78% of the original value of your home. You can also request that the PMI be cancelled once the principal balance is scheduled to fall to 80% of the original value of your home.

MBOH stands for Montana Board of Housing. MBOH “works to create a variety of housing opportunities for Montanans by partnering with local organizations across the state and leveraging federal housing funds available to Montana.” They “assist with buying a home, down payment assistance, mortgage

(n.d.). Retrieved April 17, 2023, from https://housing.mt.gov/ icing, Reverse Annuity Mortgages, rental housing assistance, and multifamily rental development.”

First Security Bank typically works with the various MBOH programs that provide down payment assistance funds for qualified first-time homebuyers. These down payment assistance programs work in conjunction with FHA, VA, and RD loans to help homeowners bridge the gap between down payment and closing costs. Interest rates are typically lower than standard FHA, VA, and RD programs. Loans are serviced by MBOH and are not sold like many other loan programs.

For more information on the various types of programs that MBOH has to offer please visit their website at http://www.housing.mt.gov.

Michael Scharfe has been a lender at First Security Bank for nine years. Reach him at [email protected].