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How Alexa and Siri Could Help You Get a Mortgage

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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In the distant past, if you wanted to know your bank account balance or to make a transfer, you had to call your bank, or worse, visit in person. As the Internet age has progressed, you’ve been able to do more and more of your banking online. Web services came first, followed by smartphone apps and mobile deposit technology — eliminating the need to leave the house for a financial transaction unless you wanted to withdraw cash. Voice-activated technologies like Apple’s Siri and Amazon’s Alexa are the latest frontiers for online banking. The Apple iPhone is the most popular smartphone on the market, and nearly a third of people between 25 and 34 years old own an Amazon Echo speaker, according to an April 2018 report by advisory firm Javelin Strategy & Research.

Financial institutions are taking advantage of this trend. Some, like Bank of America, are investing in their own voice-activated technologies. Others are utilizing Alexa’s custom platform to help customers. These technologies are currently limited to basic transactions, but according to banking technology experts, mortgages could be the next big financial product for voice assistants.

How digital voice assistants are transforming banking

Both Amazon and Apple have moved progressively further into financial technology through their voice assistants.

Amazon’s Echo speaker, which comes with its built-in Alexa voice assistant, lets you interact with Amazon in a variety of ways. You can ask Alexa for the weather forecast or to read news headlines. Amazon also allows third-party brands to develop “Alexa Skills,” which give the devices additional abilities. There are now tens of thousands of them in the Alexa Skills Store.

 

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In 2016, Capital One became the first business to use Alexa Skills as a way for consumers to interact with their financial accounts. The bank’s Alexa Skill currently allows customers to check account balances, track their spending and pay their Capital One bill.

Since then, many other financial institutions have jumped in. At last count, Javelin found that 30 different banks have Alexa Skills, said Al Pascual, senior vice president of research and head of fraud and security at the firm.

However, they’re generally made for basic services like checking account balances or recent transactions, Pascual said. “They’re not designed to do anything like money movement, or in essence, higher risk transactions,” he said.

Why? Because it’s difficult to authenticate the user. For example, if you’re at your friend’s house and ask their Alexa to transfer you money, the device can’t really know if it’s you or the friend making the request, Pascual said. Requiring a PIN is how banks typically tackle authentication, but it’s not very secure.

“I think they have a while to go until they get that figured out, but once they do, I think that opens the floodgates a bit,” Pascual said.

Arguably, Siri — Apple’s digital voice assistant — is more advanced than Alexa, said Chris Ward, principal consultant at financial intelligence company Mapa Research. This is because globally, more banks have integrated with Siri, and it allows customers to make peer-to-peer payments. Alexa, on the other hand, is currently only about reviewing account information, such as balances or credit card payment dates, Ward said.

 

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‘What you see right now is still very basic’

Regardless of whether you’re looking at Alexa or Siri, “what you see right now is still very basic, and banking through these channels certainly isn’t replacing the experiences customers can have via mobile app or an online platform,” Ward explained.

But there’s clearly demand for more voice-assisted banking. The Javelin report found that 35% of respondents would use services like Siri and Alexa to transfer money between accounts, and a third would use them to contact customer support with a question. About a quarter would likely use it to send money to someone else.

Rather than having to go through Amazon or Apple’s technology, some banks are creating their own voice assistants. For example, Bank of America has developed a digital assistant called “Erica,” which is housed within the bank’s smartphone app. Because the voice assistant technology is within an authenticated (logged in) session, it offers more security. Therefore, it gives you the ability to do more, Pascual said. For example, in addition to basic transactions like checking your balance, Erica lets you transfer money between your accounts, pay bills and send money to others.

How mortgages have been affected

Currently, due to the complexities of mortgage loans, digital voice assistants have barely entered the mortgage space. LendingTree, MagnifyMoney’s parent company, has a free Alexa Skill that allows borrowers to access mortgage rate quotes from lenders and send the results to their phone.

Rocket Mortgage from Quicken Loans has an Alexa Skill that lets customers initiate their mortgage payment, check mortgage rates and get in touch with a home loan expert. There are also several Alexa Skills that have mortgage calculators or can teach you about mortgage basics. However, we couldn’t find any lenders that currently allow consumers to apply for a mortgage via voice technology.

According to a Bank of America spokesperson Betty Riess, the Erica app doesn’t have any features related to mortgages as of now. “Currently, if a customer asks Erica about applying for a mortgage, the customer will be directed to the ‘explore our products’ page to select mortgage,” she said in an email.

 

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Why aren’t mortgages there yet? Pascual says it’s because there are still many challenges around risk. How comfortable will borrowers feel about giving Alexa their sensitive personal information like a Social Security number if they’re not authenticated?

“People still have an element of hesitancy when it comes to interacting with machines,” Pascual said. Javelin’s report found that nearly two-thirds of consumers who aren’t interested in making financial transactions with smart speakers like Alexa say it’s due to security concerns.

Ward said many consumers, even those who own products with Siri and Alexa, have concerns about the voice-activated speakers listening to what they’re saying. Also, with Siri and Alexa, you’re interacting with your bank in addition to Apple or Amazon, which makes some people more wary about sharing their personal information, Ward said. Plus, you’d have to say confidential information aloud, which limits you to private areas. All of these security risks have to be sorted out before mortgages are ready for the big time on these devices.

What comes next?

Banking technology experts believe that going through the entire mortgage process with digital voice assistants is possible in the future, but it might never be fully automated.

Pascual predicts that the next step for this technology would be Alexa serving as a starting point for a mortgage application. He anticipates that Alexa could help a borrower learn about mortgages — pulling potential loan terms from a bank after the user shares less-sensitive information, like their income. The borrower could even possibly provide the address of the home they want to buy, and Alexa could check on the home prices and calculate what a mortgage might cost them.

However, from that point, Pascual thinks Alexa might drive the consumer to a different digital channel. Perhaps it would send a message through their mobile banking app, or a text or an email that allows them to continue the application in more depth elsewhere.

He also said he could see banks or lenders bringing a loan officer into a conversation. For example, if you’re looking for something more complicated than a conventional loan, like a jumbo loan or low down payment loan, Alexa could say, “This sounds really complex” and pipe in a loan officer to continue the conversation with you via voice, Pascual said.

In other words, you wouldn’t use Alexa from start to finish, but it would be used to get the process started, Pascual said. After all, he explained, mortgages are complex, and there will be limitations.

He said many consumers had bad experiences in the past with old chat bots that have been less than helpful. If lenders can recognize the limitations and address them by incorporating human beings or other digital channels, applying for mortgages via voice could be a reality — especially if the lenders can find ways to make it less tedious than filling out an online form.

“It can, in some ways, just be easier to talk to somebody,” Pascual said, even if it’s not a human. “Machines are very good at collecting data, especially uniform data. Rather than me having to sit there and type it all on a tiny phone screen, I’m having a conversation with Alexa.”

Since voice assistants from banks — like Bank of America’s Erica — are housed within their secure app, there’s more trust there from customers than with Siri or Alexa, Ward says. For this reason, he anticipates that any future developments in this space might first evolve with bank-owned technology first. “To me, containing all of that in the experience of the app is going to be quite interesting and might resonate more with customers because they feel like they’re in that secure environment,” Ward said.

While Ward thinks it will be possible to complete a full mortgage application via Siri or Alexa one day, he’s not convinced that it’ll happen within the next five years or that it will be easier than an online form.

“For me, Siri or Alexa Skills need to actually deliver a smoother, easier experience than the customer can get elsewhere,” Ward said. “Until they can do that, I’m a bit skeptical about to what extent Siri and Alexa will be the interface where consumers want to go through a full mortgage application.”

What he believes is most likely to happen is that technology like Alexa could help expedite the application process by drawing in data from other sources. For example, he said, rather than having to enter all of your information manually, you could ask Alexa to give Chase Bank your Bank of America information to expedite the process of applying for a mortgage with Chase. Or you could have your professional information pulled in from LinkedIn.

Of course, we might also see developments from banks with their own digital voice assistants. Small mortgage loan originators probably won’t be getting into this space anytime soon, Pascual predicts. But he expects that bigger banks — especially tech-forward ones like BBVA and USAA — will be the ones to watch.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Emily Starbuck Gerson
Emily Starbuck Gerson |

Emily Starbuck Gerson is a writer at MagnifyMoney. You can email Emily here

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Guide to Getting a Federal Housing Administration (FHA) Mortgage

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Couple Celebrating Moving Into New Home With Champagne

Not all homebuyers have the money to make a traditional 20% down payment. The perception that you need one is one of the main financial obstacles that can discourage people from pursuing homeownership.

In reality, there are several options for buyers who want to get a mortgage but can only pull together a small down payment. One of the best ones, particularly for first-time homebuyers, is an FHA loan.

This article offers you a guide to getting an FHA mortgage, including details on how to qualify and the costs to consider.

Understanding the FHA mortgage program

FHA mortgages are insured by the Federal Housing Administration (FHA), part of the U.S. Department of Housing and Urban Development. The program is a key way that people of moderate income can become homeowners. Nearly 83% of homeowners who borrowed an FHA loan in 2018 were first-time homebuyers, according to a report from HUD.

FHA mortgages are funded by FHA-approved lenders and then insured by the government. This backing protects lenders from loss if borrowers default. Because of this protection, lenders can be more lenient with their qualifying criteria and can accept a significantly lower down payment.

You can get approved for an FHA mortgage with as little as a 3.5% down payment and a credit score of 580. You may also qualify with a credit score as low as 500, though you’ll need to put down 10% instead.

On a $200,000 home, that comes out to a down payment of $7,000 to $20,000 when taking out an FHA loan, depending on your credit score.

Keep in mind you’ll also be responsible for closing costs, which typically cost 2% to 5% of a home’s purchase price. Closing costs are necessary to complete your transaction, and include services such as appraisals and home inspections. However, you may be able to negotiate to have some of these costs covered by the seller.

Is an FHA loan right for you?

FHA loans are particularly suited for several different types of homebuyers.

First-time homebuyers, who often have lower credit scores and smaller available down payments, tend to gravitate to FHA loans. Additionally, boomerang buyers — people who lost a home in the past due to a bankruptcy, foreclosure or short sale — might also benefit from an FHA loan.

Negative credit events such as foreclosure can drop credit scores by more than 100 points in many cases, and there’s typically a waiting period of three years before you’re eligible to buy a home again. Once that’s up, the lower credit score requirements of the FHA loan program could help you become a homeowner again.

Types of FHA mortgages

The FHA offers both 15- and 30-year mortgages, each with fixed rates or adjustable rates.

With a fixed-rate FHA mortgage, your interest rate is consistent through the loan term. You know what your principal and interest payment will be for the life of the mortgage. However, your overall monthly payment may increase or decrease slightly based on your homeowners insurance, mortgage insurance premium and property taxes.

Adjustable-rate FHA mortgages start out with a low and fixed interest rate during an introductory period of time, usually five years. Once the introductory period ends, the interest rate will adjust annually, which means your monthly mortgage payments may increase based on market conditions.

A unique situation where signing up for a low, adjustable-rate FHA mortgage could make sense is if you plan to sell or refinance the home before the introductory period ends and the interest rate changes. Otherwise, a fixed-rate FHA mortgage has predictable principal and interest payments and may be the better option.

FHA loan limits

The FHA imposes a limit on the amount of money that homebuyers are allowed to borrow each year. For 2019, the FHA loan limits for one-unit properties are $314,827 in most U.S. counties and $726,525 for high-cost areas. You can find your county’s loan limit information for one- to four-unit properties by using the FHA’s lookup tool.

Qualifying for an FHA loan

Besides the low down payment, an undeniable benefit of the FHA mortgage is the low credit score requirement. You may qualify for a 3.5% down payment with a credit score of 580 or higher. You can qualify with a minimum credit score of 500, but you’ll have to make at least a 10% down payment.

Your debt-to-income (DTI) ratio is another key metric lenders use when determining whether you can afford a mortgage. DTI measures the percentage of your gross monthly income that is used to repay debt. Lenders consider two DTI ratios when determining your eligibility — the front-end (housing debt) ratio and the back-end (total debt) ratio.

Your front-end ratio is the percentage of your income it would take to cover your total monthly mortgage payment. Lenders typically like to see a front-end ratio of no more than 31%.

Your back-end ratio illustrates the percentage of your income that covers your total monthly debts. Lenders prefer a back-end ratio of 43% or less, but may approve a higher ratio if you have compensating factors, such as a higher credit score or a larger down payment.

You’ll also need to have a steady income and proof of employment for the last two years. Additionally, the home you’re purchasing via FHA must also be your primary residence, at least for the first year.

FHA mortgage insurance

At first glance, an FHA mortgage probably seems like the ultimate hack to buying a home with minimal savings. The flip side to this is you must pay mortgage insurance premiums (MIP) in exchange for your lower down payment.

Remember, FHA-approved lenders offer mortgages that require less money down and flexible qualifying criteria because the Federal Housing Administration will cover the loss if you default on the loan. The government doesn’t do this for free.

FHA mortgage borrowers must “put money in the pot” to cover the cost of this backing through upfront and annual mortgage insurance premiums. The upfront insurance premium costs 1.75% of the loan amount and can be rolled into your mortgage balance.

The annual mortgage insurance premium is divided into 12 installments and paid monthly as part of your mortgage payment. The annual premium ranges from 0.45% to 1.05%, based on your loan term, loan amount and loan-to-value ratio (LTV).

Your LTV is a metric that compares your loan amount to your home’s value. It also represents the equity you have in the property. For example, putting 3.5% down means your LTV would be 96.5%. In other words, you have 3.5% equity in the home, and your loan is covering the remaining 96.5% of the home value.

Here’s the annual MIP on a 30-year FHA mortgage (for loans less than or equal to $625,500):

  • LTV over 95% (you initially have less than 5% equity in the home) – 0.85%
  • LTV under 95% (you initially have more than 5% equity in the home) – 0.8%

As you can see, starting off with a smaller down payment will cost you more in mortgage insurance premiums. Additionally, in most cases, you’ll pay annual MIP for the life of your loan.

However, if your LTV was less than or equal to 90% at time of origination — meaning you made a down payment of at least 10% — you can cancel MIP after 11 years.

FHA loans vs. conventional loans

Government-backed home mortgages like the FHA loan are special programs serving borrowers who might not qualify for a traditional mortgage.

Conventional mortgages are offered by lenders and banks and typically follow Fannie Mae and Freddie Mac’s mortgage standards. Fannie and Freddie are government-sponsored enterprises that buy loans from mortgage lenders and banks that fit their requirements.

The qualifying criteria bar for conforming loans is usually set higher. For instance, you typically need to have at least a 620 credit score to qualify for a fixed-rate conventional loan. However, credit score minimums vary by lender, but in any case, a score above 620 will be necessary for the most competitive interest rates.

A misconception about conventional mortgages is that borrowers must have 20% for a down payment to qualify. Mortgage lenders may accept less than 20% down for a conventional mortgage if you have a high credit score and pay their version of mortgage insurance premiums, which is called private mortgage insurance (PMI).

Similar to FHA mortgage insurance, PMI is a private insurance policy that protects the lender if you default. Be careful not to confuse the two types of insurance policies.

If you have PMI on a conventional mortgage, you’re able to request the removal of those insurance payments when you build up 20% equity in your home. On the other hand, the mortgage insurance premiums for most new FHA mortgages can’t be removed unless you refinance.

When to choose a conventional mortgage instead

Choosing an FHA loan can be a shortcut to homeownership if you don’t have much cash saved or the credit history to get approved for a conventional mortgage. Still, the convenience comes at a price that can follow you for the entire loan term.

Furthermore, putting a small sum down on a home means it will take you quite some time to build up equity. A small down payment can also increase your monthly payments and interest rate.

Homebuyers with a strong credit score should consider saving a bit more money and shopping for a conventional home loan first before thinking an FHA mortgage is the only answer to a limited down payment.

If you plan to put down at least 5% toward your home purchase and have a good or excellent credit score, it might make sense to borrow a conventional mortgage instead. A conventional home loan with PMI may not require the same upfront insurance payment as the FHA home loan, so you can find some savings there. Plus, you’re capable of getting rid of PMI without refinancing.

There are a few conventional mortgage programs that allow a 3% down payment, including Fannie Mae’s HomeReady program and Freddie Mac’s Home Possible program. These products also have cancellable mortgage insurance.

Shopping for an FHA loan

So, you’ve reviewed all the information and determined that an FHA loan is right for you. Once you’re ready to start the homebuying process, one of the most important things on your to-do list is shopping around.

Gather quotes from multiple FHA-approved lenders to find the most competitive rate. If you’re unfamiliar with the approved lenders in your area, you can use the HUD’s lender list search to locate them.

Comparison shopping for the best mortgage rate can save you thousands in interest over the life of your loan, according to research from LendingTree, which owns MagnifyMoney. Be sure you also compare the various other costs associated with borrowing a mortgage, including lender fees and title-related expenses.

Don’t rush to a decision. If you’re still not sure which mortgage type will be the most cost-effective for you, ask each lender you shop with to break down the costs for a comparison.

This article contains links to LendingTree, our parent company.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Crissinda Ponder
Crissinda Ponder |

Crissinda Ponder is a writer at MagnifyMoney. You can email Crissinda here

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2019 FHA Loan Limits in Wyoming

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

If you’re looking to buy a house in Wyoming, you probably already know the state boasts the nation’s smallest population and the lowest population density. Its rural nature makes Wyoming the perfect place for homeowners who want to enjoy the natural wonders of the West without living right on top of their neighbors.Wyoming is also a state where homeownership is a reality for a large portion of the population: The U.S. Census Bureau estimates that more than 69% of the homes in the state are occupied by their owners.

So how do you make your Wyoming homeownership dreams come true? One popular option is a loan backed by the Federal Housing Administration (FHA). Last year, 0.23% of the nation’s FHA loans originated in Wyoming, where buyers took advantage of the federal backing to access benefits like lower interest rates and smaller down payments.

But keep in mind that FHA loans are subject to limits on the amount you can borrow. Those limits change every year to keep up with housing prices across the country. This year, FHA loan limits have climbed in Wyoming, allowing potential buyers who qualify for an FHA loan to borrow up to $314,827 for a single-family home.

Wyoming FHA Loan Limits by County

County NameOne-FamilyTwo-FamilyThree-FamilyFour-FamilyMedian Sale Price
ALBANY$314,827 $403,125 $487,250 $605,525 $239,000
BIG HORN$314,827 $403,125 $487,250 $605,525 $139,000
CAMPBELL$314,827 $403,125 $487,250 $605,525 $228,000
CARBON$314,827 $403,125 $487,250 $605,525 $174,000
CONVERSE$314,827 $403,125 $487,250 $605,525 $207,000
CROOK$314,827 $403,125 $487,250 $605,525 $199,000
FREMONT$314,827 $403,125 $487,250 $605,525 $77,000
GOSHEN$314,827 $403,125 $487,250 $605,525 $159,000
HOT SPRINGS$314,827 $403,125 $487,250 $605,525 $157,000
JOHNSON$314,827 $403,125 $487,250 $605,525 $225,000
LARAMIE$314,827 $403,125 $487,250 $605,525 $243,000
LINCOLN$314,827 $403,125 $487,250 $605,525 $253,000
NATRONA$314,827 $403,125 $487,250 $605,525 $215,000
NIOBRARA$314,827 $403,125 $487,250 $605,525 $165,000
PARK$314,827 $403,125 $487,250 $605,525 $241,000
PLATTE$314,827 $403,125 $487,250 $605,525 $175,000
SHERIDAN$314,827 $403,125 $487,250 $605,525 $253,000
SUBLETTE$314,827 $403,125 $487,250 $605,525 $235,000
SWEETWATER$316,250 $404,850 $489,350 $608,150 $259,000
TETON$726,525 $930,300 $1,124,475 $1,397,400 $789,000
UINTA$314,827 $403,125 $487,250 $605,525 $206,000
WASHAKIE$314,827 $403,125 $487,250 $605,525 $173,000
WESTON$314,827 $403,125 $487,250 $605,525 $184,000

How are FHA loan limits calculated?

FHA loans are backed by the federal government, and it sets the loan limits.

The government sets a floor limit, which is the maximum amount that buyers are allowed to borrow in areas deemed “low cost.” It also sets a ceiling limit, the maximum amount an eligible buyer can access in an area that’s considered “high-cost.”

The FHA bases its figures on the conforming loan limit — the biggest loan that Fannie Mae and Freddie Mac will buy — with the floor set at 65% of the conforming loan limit, and the ceiling at 150%.

All 23 counties in Wyoming are considered low-cost, and therefore have the loan limit of $314,827.

These are the limits that the FHA has set for low-cost areas across the United States this year:

  • One-unit: $314,827
  • Two-unit: $403,125
  • Three-unit: $487,250
  • Four-unit: $605,525

These are the limits set for high-cost areas across the USA in 2019:

  • One-unit: $726,525
  • Two-unit: $930,300
  • Three-unit: $1,124,475
  • Four-unit: $1,397,400

Are you eligible for an FHA loan in Wyoming?

Of course, just buying a house in Wyoming won’t guarantee you a $314,827 mortgage, nor does it grant you access to an FHA loan. There are requirements to meet regarding your credit score, debt-to-income ratio and other factors. You can find out more in MagnifyMoney’s complete guide to FHA loans.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Jeanne Sager
Jeanne Sager |

Jeanne Sager is a writer at MagnifyMoney. You can email Jeanne here

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