United Wholesale Mortgage (UWM), the nation’s largest wholesale lender, announced a new product on Wednesday that will qualify borrowers for investment properties based on monthly rental income, rather than their current income.
This is the second new non-QM product the Pontiac-based lender has launched this month – the wholesale lender also unveiled a bank statement loan product for self-employed borrowers.
Rising interest rates, already in the 4% range, have significantly slowed refinances, forcing originators to look to other products that appeal to buyers or those with equity in their existing homes.
According to UWM, the product called Investor Flex is a 30-year fixed debt service coverage ratio (DSCR) loan option for real estate investors. It’s available on purchase and refinance loans up to $2 million and can be used to finance up to 20 properties.
“It will also be offered for short-term rental properties, giving brokers another competitive selling point when targeting property investors,” the company said in a statement Wednesday.
The new product targets real estate investors, a group that accounted for 16.4% of all home sales in the third quarter of 2021, according to the RealtyTrac Investor Buy Report.
Investors paid a median purchase price of $245,000 for fixed and reversible and long-term rental properties, compared to a median price of $302,000 for all home purchases. But most of them pay in cash: 79% of all investor purchases were cash sales in Q3 2021.
“Rising house prices and inflation make it difficult for investors to meet their return on investment (ROI) targets, but they make it even harder for the average consumer to afford to buy a property,” he said. said Rick Sharga, executive vice president of RealtyTrac. in a report.
He added: “So while investor profit margins may shrink, it is possible that we will continue to see investor share of buys increase in the coming quarters.”