United Wholesale Mortgage (UWM), the nation’s largest wholesale lender, announced on Wednesday a new product that will qualify borrowers for investment properties based on the monthly rental income, rather than the 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 mid-4% range, have dramatically slowed refinancings, forcing originators to look toward other products that entice purchase 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 is 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 real estate investors,” the company said in a statement Wednesday.
The new product targets real estate investors, a group that represented 16.4% of all home sales in the third quarter of 2021, according to the RealtyTrac Investor Purchase Report.
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Investors paid a median purchase price of $245,000 to fix-and-flip 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 the third quarter of 2021.
“Rising home prices and inflation make it difficult for investors to achieve their return on investment (ROI) objectives, but they make it even harder for the average consumer to afford to buy a property,” Rick Sharga, executive vice president at RealtyTrac, said in a statement.
He added: “So, even though investor profit margins may be declining, it’s possible that we will continue to see the investor share of purchases increase over the next few quarters.”
