This Mortgage Company Is Offering 2% Interest Rates Right Now
Written by
Dawn Allcot
Edited by
Nicholas Morine
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High interest rates remain a barrier for people looking to secure a mortgage and purchase a home in 2024. Experts predict that rates for a 30-year fixed mortgage may fall as low as 6.6% by the end of the year, GOBankingRates recently reported.
But, compared to the pre-pandemic market — when rates fell below 4%, according to data from The Mortgage Reports — a mortgage will still cost hundreds more per month.
Enter a new service, Roam, which launched in September 2023. The platform could be the solution thousands of prospective homebuyers need to secure a more affordable mortgage rate now, rather than later. The website offers homes for sale with mortgage rates as low as 2%.
The website shows that buyers can cut mortgage payments by half with a lower interest rate. The home page shows a house with a $3,500 monthly mortgage payment at 7.5%. That monthly payment drops to $1,850 at 2% interest.
How Roam Works
Roam provides listings for homes with an assumable mortgage. An assumable mortgage is a loan that allows buyers to take over payments from the current owner. When you shop for a home through Roam, you’re not just buying the home, you’re purchasing the mortgage along with it. All FHA and VA loans are eligible for assumption, according to Roam’s FAQ page.
How Roam Could Change the Housing Market in 2024
Roam helps solve two pain points for home buyers and sellers. First, Roam makes it easier for buyers to secure the home they want without suffering from today’s high interest rates. This can help first-time homebuyers afford a house.
An assumable mortgage can also help current homebuyers who may want a different home but are hesitant to sell because they don’t want a higher mortgage rate. However, people’s needs often change — and their home or community may no longer suit them for a variety of reasons. With an assumable mortgage, sellers might buy the house they want (and assume another low mortgage via Roam or similar) without sacrificing much of the rate they enjoy in their current place. Roam also does not charge sellers a fee.
Additionally, by allowing people to assume a low-interest mortgage, Roam also makes it easier for sellers to command a higher price for the home. According to Forbes Advisor, sellers get five times more offers when they sell their home with a low-rate, assumable mortgage.
What Prospective Homebuyers Need to Know About Assumable Mortgages
To qualify for an assumable mortgage, you must show the lender that you qualify for the original loan. That means you’ll need to meet U.S. military service requirements to purchase a home with a VA loan. FHA loan borrowers must have a credit score of 580 or above and meet other financial requirements. Additionally, FHA loans are only available for first-time homeowners. However, the FHA defines a “first-time homebuyer” as someone who has not owned a principal residence for three years.
The other challenge to securing an assumable mortgage is the price difference between what’s left on the mortgage and the amount the seller is asking for the house. If you can’t cover the difference in cash as a down payment, you’ll need to secure an additional mortgage.
If additional financing is needed to cover the selling price, minus any down payment, Roam works with lenders to provide low rates. The rate may not be as low as the assumable mortgage rate, but, according to Roam, the blended rate is likely to be more attractive than mortgage rates offered by traditional lenders today.
Forbes Advisor noted that 2% assumable rate mortgages are hard to find, but most of the listings at Roam offer rates of 5% or below. In some rare cases, the assumable rate may exceed 5%, but will still be lower than today’s listed mortgage rates for a 30-year fixed rate loan.
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