Take Advantage of This Mortgage Company’s Limited-Time 2% Interest Rates
High interest rates are still a major hurdle for people trying to get a mortgage and buy a home in 2024. Experts think that rates for a 30-year fixed mortgage might drop to around 6.6% by the end of the year, according to GOBankingRates. However, this is still much higher than the pre-pandemic rates, which were below 4%, making monthly mortgage payments significantly more expensive.
A new service called Roam, which started in September 2023, might help many potential homebuyers get a more affordable mortgage rate now instead of waiting. Roam offers homes for sale with mortgage rates as low as 2%. The website shows that with a lower interest rate, buyers can cut their mortgage payments by half. For example, a house with a $3,500 monthly mortgage payment at 7.5% interest would drop to $1,850 at 2% interest.
Roam lists homes with assumable mortgages, which means buyers can take over the current owner’s loan payments. When you buy a home through Roam, you’re also buying the mortgage. All FHA and VA loans can be assumed, according to Roam’s FAQ page.
Roam addresses two main issues for home buyers and sellers. First, it helps buyers get the home they want without dealing with high interest rates, making it easier for first-time buyers to afford a house. Second, it helps current homeowners who want to move but are reluctant to sell because they don’t want a higher mortgage rate. With an assumable mortgage, sellers can buy a new home and assume another low mortgage without losing the favorable rate they have now. Roam also doesn’t charge sellers a fee.
By allowing people to assume a low-interest mortgage, Roam makes it easier for sellers to get a higher price for their home. Forbes Advisor notes that sellers receive five times more offers when they sell their home with a low-rate, assumable mortgage.
To qualify for an assumable mortgage, you must show the lender that you qualify for the original loan. For a VA loan, you need to meet U.S. military service requirements. For an FHA loan, you need a credit score of 580 or above and must meet other financial criteria. FHA loans are only available for first-time homeowners, defined as someone who hasn’t owned a principal residence for three years.
One challenge with assumable mortgages is the price difference between what’s left on the mortgage and the seller’s asking price. If you can’t cover this difference in cash, you’ll need another mortgage. Roam works with lenders to provide low rates for additional financing. While these rates might not be as low as the assumable mortgage rate, they are likely to be more attractive than current rates from traditional lenders.
Forbes Advisor mentions that 2% assumable rate mortgages are rare, but most listings on Roam offer rates of 5% or below. In some cases, the assumable rate might be over 5%, but it will still be lower than today’s rates for a 30-year fixed mortgage.