- Roam, a startup led by CEO Raunaq Singh, aims to increase housing market affordability by connecting homebuyers with homes having assumable mortgages, potentially offering lower mortgage rates.
- The key to Roam's success lies in its ability to address the challenges associated with assumable mortgages, tapping into significant potential savings for buyers.
- Roam's business model involves offering its services for free to sellers and charging buyers a fee of 1% of the purchase price through closing costs, while focusing on states with a substantial portion of assumable mortgages for expansion.
Roam, a startup led by CEO Raunaq Singh, aims to increase housing market affordability by connecting homebuyers with homes having assumable mortgages, potentially offering lower mortgage rates. The company, backed by Opendoor co-founders, operates a real estate portal similar to Zillow.com, exclusively showcasing homes with loans eligible to be taken over.
What to know: Roam, a startup founded by CEO Raunaq Singh, aims to revolutionize the housing market by connecting homebuyers with sellers who have assumable mortgages. These mortgages allow buyers to take over the existing mortgage, potentially benefiting from much lower mortgage rates. Roam's platform exclusively showcases homes for sale with loans eligible to be assumable, tapping into the cost savings that can come with such mortgages.
Looking ahead: The key to Roam's success lies in its ability to address the challenges associated with assumable mortgages. While most conventional mortgages are not assumable, loans insured by the FHA and backed by the VA or USDA are eligible. The potential savings are significant, with the net effective mortgage rate in the U.S. currently at 3.60%, contrasting sharply with the average 30-year fixed rate of 7.32%. This stark difference can translate to thousands of dollars in savings for buyers.
Deeper details: Roam's business model involves offering its services for free to sellers, while charging buyers a fee of 1% of the purchase price through closing costs. By focusing on states like Texas, Florida, Georgia, Arizona, and Colorado, which represent a substantial portion of assumable mortgages, Roam aims to expand its reach to more states, including Ohio, in the near future. The company's approach streamlines the process for buyers, providing a seamless experience from discovery to closing.
The backstory: Despite the potential benefits of assumable mortgages, challenges remain, such as the low number of assumptions and lenders' lack of economic incentives. Sellers may also be hesitant to facilitate assumable transfers due to associated risks. However, Roam's innovative platform not only addresses these challenges but also educates sellers on the advantages of holding an assumable mortgage. By unlocking this hidden asset, homeowners can potentially enhance their selling prospects and financial outcomes.