UWM enters the HELOC space

Top wholesale lender United Wholesale Mortgage (UWM) is the latest originator to join the resurgent home-equity lines of credit (HELOC) market.

The Pontiac, Michigan-based lender has started to offer standalone and piggyback options, as fast-rising home values allow homeowners to tap the equity in their houses to pay debts, expenses or investments. 

UWM’s products announced Wednesday are available on primary and second home loans, with loans up to $350,000, according to the company’s website. They are not applicable in Texas. 

According to UWM, standalone HELOCs are an alternative when a “cash-out refinance doesn’t make sense due to having a low-interest rate on their current mortgage,” the company said in a news release. 

Meanwhile, the piggyback HELOC, which provides an additional loan taken out on property alongside a first mortgage, is ideal for borrowers with less available for a down payment. “This is a great option for those who want to split up a first and second mortgage to avoid mortgage insurance or to keep their first in a conforming loan,” according to the company. 

UWM has been proactive in launching new products and reducing prices amid higher mortgage rates and shrinking loan volumes. 

The lender also announced that it has raised its VA jumbo loan limit from $2 million to $4 million, effective immediately. Last week, it launched temporary rate buydowns, allowing borrowers to receive lower mortgage rates at the beginning of their loan terms by using seller concessions as part of the payment.  

The products complement the wholesale lender’s “Game On” initiative, a cut-rate pricing strategy hatched to grow market share with purchase buyers. In response, Homepoint, the country’s third-largest wholesaler, launched a new program to reduce rates by 75 basis points for borrowers with lower income.

In the HELOC space, however, UWM is following announcements from its rivals. Rocket Mortgage, Guaranteed Rate, loanDepot and New Residential Investment Corp. (recently rebranded as Rithm Capital) either have plans or introduced HELOC loan products. 

Black Knight recently reported that the amount of tappable home equity nationally hit $11.5 trillion in the second quarter — after accounting for homeowners retaining at least 20% equity. That figure is up by around $500 billion from the first quarter and $2.3 trillion year over year.

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