United Wholesale Mortgage (UWM) this week launched a temporary rate buydown, a product that allows borrowers to receive a lower mortgage rate at the beginning of the loan term by using a seller’s concession as part of the payment.
It is a complementary product of the money lender’s “Game On”. Initiative, a discount pricing strategy devised to increase market share with purchasing buyers.the housing market favor buyer Seller concessions become more frequent.
With a buydown, the borrower pays a lower mortgage rate for the first year or two of the mortgage, after which it is paid in full for the remainder of the loan term. For example, if the market average for a 30-year fixed rate mortgage is 5.22%, the borrower will take advantage of the seller’s concession to reduce the rate to 3.22% in the first year, 4.22% in the second year, and then 5.22%. can pay for 3 to 30 years.
Temporary low interest rates on commodities are usually reduced as they are deposited in lump sums into buy-down accounts that are released monthly to cover the borrowers’ lower payments. Seller concessions, which are closing costs that the seller has agreed to pay, are credited in one lump sum to the buydown account.
According to UWM, this is an ideal option for borrowers looking to increase their income over the next few years or have seller concessions to use and want to take advantage of lower interest rates up front.
UWM’s products are not only for traditional primary and secondary home purchases, but also Federal Housing Administration (FHA) and veteran (VA) Primary home purchase.
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Borrowers will need to qualify for full monthly payments before the lower interest rate takes effect, UWM said Wednesday.
Deploying UWM in June “Game On” FeeThis reduces the price of all loans by 50-100 bps points, causing competitors to either lower their prices and reduce their profits or lose money on their loans. The initiative is expected to continue for several more quarters, but it’s unclear when wholesalers will end the program.
UWM Chairman and CEO Mat Ishbia told analysts at the company’s earnings call. second quarter earnings Presentation on August 9th.