In an effort to make loan closings even faster, United Wholesale Mortgage (UWM) is offering an appraisal credit on home purchase loans submitted through March 31st, 2022.
Often times, appraisals slow down what’s already a lengthy mortgage process, a critical issue on time-sensitive transactions like home purchases.
To motivate their mortgage broker partners, they’re offering a credit for up to $600 if they utilize their “CD at Initial Underwrite” process.
This entails verifying a few details related to the property value, property taxes, and homeowners insurance upfront.
Doing so allows the lender to release the Closing Disclosure (CD) when the loan is conditionally approved, which can get borrowers to their closing date an average of eight days earlier.
How to Qualify for the No-Cost Appraisal
As noted, your mortgage broker will need to complete a few steps early on in the loan process to qualify for the no-cost appraisal.
There are three categories that require their attention, including the appraisal, taxes, and homeowners insurance.
They must upload a document in each category to satisfy these requirements.
For the home appraisal, a sales contract is good enough because the sales price is used as the preliminary value.
The taxes for the subject property can be verified simply by uploading the MLS listing.
And the homeowners insurance piece can be satisfied simply by obtaining a quote from an insurance company with the subject property’s address.
Lastly, the loan must be locked as well, meaning no floating allowed if you want to take advantage of this offer.
As you can see, it’s pretty easy to trigger the CD at Initial Underwrite, which aside from getting your loan closed faster, could save you up to $600.
Which Transactions Qualify for the No-Cost Appraisal Offer?
It’s important to note that this offer only applies to home purchase loans, not mortgage refinances.
This might be an effort by UWM to gain more purchase business as the market shifts away from a refinance-heavy environment.
And you must use a mortgage broker who is approved to work with UWM.
The good news is all loan types are eligible, including conventional loans backed by Fannie Mae and Freddie Mac, government loans (FHA loans, VA loans), and jumbo loans.
However, the property must be your primary residence, meaning second homes and investment properties don’t qualify.
Assuming you meet the requirements and close your loan, the up to $600 credit will be issued after closing.
Is This a Good Deal?
It’s always nice to get a discount, or not have to pay for something. And the appraisal can be a pricey item on a mortgage transaction.
However, the appraisal is just one of the many closing costs you’ll have to pay on your loan, along with possible fees for underwriting, processing, title/escrow, and so on.
In other words, you can’t focus solely on one item to determine if one lender is a better choice than another.
You’ll need to look at the deal holistically by considering the mortgage rate offered, the fees (ultimately the mortgage APR), and their ability to close your loan on time.
Assuming two lenders are offering an identical deal, and your broker can get the appraisal cost refunded, they might be the better choice.
This is further sweetened by the fact that doing so allows them to close eight days faster thanks to the steps required.
Of course, many lenders structure loans where borrowers don’t have to pay these costs out-of-pocket anyway thanks to lender credits.
There’s also the question of what happens if an appraisal waiver is offered. If the loan qualifies for a waiver, the borrower likely wouldn’t get the credit.
Either way, it’s nice to see a lender getting aggressive as mortgage rates rise, which could offset some additional costs plaguing borrowers today.