UWM to cover appraisal costs on 1-0 temporary rate buydowns
Michigan-based United Wholesale Mortgage (UWM) wants to court more brokers by offering no-cost appraisals on 1-0 temporary rate buydowns amid fierce competition in the industry.
The wholesale lender will cover up to $600 of the appraisal cost on all conventional and government-backed home loans until March 31 when a broker uses UWM’s 1-0 temporary rate buydown.
Borrowers with temporary rate buydowns funded by a seller, builder or lender pay a lower mortgage rate during the initial period of their loans, and the borrower’s reduced monthly payments are subsidized with money deposited into an escrow account. The escrow account is funded by either the seller, builder or lender via a lump-sum payment at closing.
“With a UWM 1-0 buydown, borrowers won’t have a higher payment until 2025, giving brokers a unique opportunity to combat higher rates and possibly refinance the loan down the line. No-cost appraisals are one of the many tactics UWM is offering to give independent mortgage brokers a competitive edge when it comes to building relationships with real estate agents and borrowers around the nation,” the lender said in a news release.
UWM initially rolled out 2-1 and 1-0 temporary rate buydowns in August 2022 for conventional primary and secondary home purchases, as well as Federal Housing Administration (FHA) and Veterans Affairs (VA) primary home purchases.
Later that year, the wholesale lender provided temporary rate buydowns for jumbo loans, and expanded options to 3-2-1 and 1-1 buydowns.
UWM currently offers seller- or lender-paid 1-, 2- and 3-year temporary rate buydown options, according to its website.
Lenders started rolling out temporary rate buydowns in 2022 to help compensate for lost origination volume due to higher mortgage rates.
Rocket Mortgage, loanDepot, Guild Mortgage and NewRez are among the lenders that either cover the difference in mortgage payments or offer the option of seller- or builder-paid temporary rate buydowns.
