Discover UWM's 100% Financing Program: Benefits, Risks, and Expert Opinions by Kevin Retcher vs CNN

UWM’s 100% Financing Program: A Comprehensive Overview
Hi, I’m Kevin Retcher, owner of First Meridian Mortgage. Today, I want to discuss United Wholesale Mortgage's (UWM) 0 percent down program-a unique opportunity for prospective homeowners. While some media outlets like CNN may caution "buyer beware," I aim to provide a balanced view, addressing both pros and cons from my professional perspective.
How the Program Works
To start, the program offers a 3 percent down payment assistance for homes priced up to $500,000. UWM supports two sub-programs: Home Possible and HomeOne Ready. Here’s a quick breakdown:
- *Home Possible*
- *HomeOne Ready*
For a $500,000 purchase, the 97 percent covered by UWM is $485,000, while the remaining 3 percent ($15,000) is covered by UWM as a second trust. With a 780 credit score, the mortgage insurance is priced at 0.3%. Here's a snapshot of the numbers based on current pricing:
- *Principal and Interest:* $3,186.10
- *Mortgage Insurance:* $121
- *Taxes:* $425
- *Insurance:* $200
- *HOA:* $125
- *Total Monthly Payment:* $4,057
Income Requirements
Depending on your debt, the required income to qualify for this program is roughly $98,950 per year, which translates to about $118,000 if you have no other debts. However, if your debt-to-income ratio is 49%, you’d need an income of about $99,000.
Potential for Higher Loan Amounts
In regions like the DMV, the program adapts for higher loan amounts. For a $750,000 purchase, you would only need to contribute $7,500. This twist makes the program more appealing and refutes some of CNN’s concerns about the zero percent down payment.
Caps and Criteria
The program has a cap: you can't put more than 1 percent down and still qualify for the second trust. It also includes income-based criteria. For Home Possible, the minimum credit score is 620, while HomeOne requires a minimum of 700. There is unlimited income on Homeone.
Comparing with Grant Programs
While some grant programs don’t require repayment, UWM’s program offers a zero percent interest loan for as long as you need it, making it a strong contender for those who prefer to keep extra cash in the bank. Additionally, UWM provides a $5,000 grant to those who qualify, which can go toward closing costs or down payments.
CNN’s Perspective and My Take
CNN's Perspective
Critics, including a professor interviewed by CNN, have voiced concerns about the lack of equity buyers might have under this program and its similarities to pre-2008 practices. Here’s my take:
- Unlike the no-asset loans of 2008, these are fully underwritten loans with standard ratios.
- Mortgage insurance covers loans in default, ensuring lenders are protected.
- Comparing this to FHA loans or USDA loans, which offer similar benefits, is crucial. These have long operated without major issues.
Debunking Misconceptions
- VA and USDA loans have operated with zero down for years without problems.
- UWM offers a zero percent interest second loan, which borrowers repay upon selling or refinancing-a deal even comparable to zero-interest credit card offers.
- Homes priced above $500,000 can finance a higher amount with a minimal personal contribution, debunking worries about lack of commitment from buyers.
Final Thoughts
This program indeed has its own set of positives and cons. The most significant drawback is the upfront fee of approximately $1,070 for the second trust, which equates to a 7 percent charge on a $15,000 loan. However, well-negotiated seller concessions could cover this, And make this a Viable program for many.
*******************************
Kevin Retcher, Broker Owner
Loan Officer, Insurance Agent, Realtor
(o)703-799-5626
(C) 703-201-6138
Email [e-mail]
Website: firstmeridianmortgage.com/
Loan Application: www.blink.mortgage/app/signup...
***************************************************************************
Live Mortgage rates
firstmeridianmortgage.com/get...
First Meridian Mortgage, 8305 Richmond Hwy 12A, Alexandria VA 22309
Licensed in VA,DC,MD - NMLS 180004, NMLS 116922 www.nmlsconsumeraccess.org
KSA Insurance Agency, 8305 Richmond Hwy 12A, Alexandria VA 22309
Jobin Realty, 5592 Backlick Road. Springfield Virginia, 22151 703-642-8500
Licensed realtor in Virginia