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Roam CEO Raunaq Singh’s innovative approach aims to increase housing affordability by connecting homebuyers with sellers who have assumable mortgages, allowing buyers to take over the existing mortgage, which often has a lower rate.
Singh launched Roam in September as a real estate portal similar to Zillow.com or Realtor.com, exclusively featuring homes with assumable loans. While most conventional mortgages are not assumable, loans insured by the FHA and those backed by the VA or USDA are eligible under specific requirements.
The potential cost savings from an assumable mortgage can be substantial. The average 30-year fixed mortgage rate is currently at 7.32%, but the net effective mortgage rate among all mortgage holders in the U.S. is just 3.60%. This substantial difference can lead to savings of over $10,000 per year in mortgage payments.
Roam aims to address the challenges related to assumable mortgages by providing transparency and coordination throughout the process. With the financial backing of Opendoor co-founders Keith Rabois and Eric Wu, Roam not only finds properties with assumable mortgages but also assists buyers through the entire closing process.
As of today, Roam’s listing website exclusively showcases homes currently for sale with assumable loans in several states, and the company plans to expand to more states in the near future.
Roam is free for sellers, and instead, they collect a fee of 1% of the purchase price from the buyer through closing costs.
Despite the benefits of assumable mortgages, there are challenges, including the low number of assumptions and the potential reluctance of some sellers to facilitate the transfer. However, Singh believes that homeowners with assumable mortgages have a significant advantage when selling their homes.
