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Robert was 37 and newly engaged. He and his fiancée were living with his parents and dreamed of owning their own home to start their new married life. The wedding was nine months away, and Robert hoped this was enough time to find their dream home before the big day.
Their challenge was finding a house they loved that they could also afford. Robert and his fiancee were working hard to build up some savings while also paying down $200,000 in student loan debt after completing graduate school a few years earlier. The couple had both earned their Physician Assistants degree and were working in emergency medicine. Even with two incomes, the question of how much they could afford was becoming more and more daunting as mortgage interest rates shot up.
It Started With Late Night House Hunting
Anyone who has ever bought a house knows what it’s like to go down the internet house hunting rabbit hole. One house catches your eye, then another, and before you know it, it’s past your bedtime.
Sometimes those late night searches pay off. “Purely by chance, around midnight during one of my hunting searches, I found Roam mentioned on a listing. It was the type of house we wanted in an area we liked, close to work and our family,” Robert said.
To Robert’s surprise, it was also a home he could afford because it came with a low rate assumable mortgage. “When I first saw the 2.7% rate on the listing, it piqued my interest,” he said. But Robert had never heard of assumable mortgages and was skeptical. “My first thought was that there had to be fine print. It must’ve been a marketing ploy. It seemed too good to be true.”
Discovering Roam and Assumable Mortgages
Well adept at researching from his graduate school days, Robert decided to investigate and make sure it was legitimate. Robert scoured the internet for more information about assumable mortgages and Roam. In his research, he learned that all government-backed loans, such as FHA and VA mortgages, are eligible for assumable by law. Since the home he was interested in had an FHA mortgage, this meant that he could buy the house and take over the existing mortgage from the seller if he met the loan qualifications.
Robert reached out to the company, and Roam walked him through their process and how they work on behalf of both the seller and buyer to ensure the transaction closes on time. Roam provided an initial savings calculation for the assumable mortgage, which he was able to verify by researching a similar listing. “There was another listing in the same neighborhood. One was the same price at 7.5% with 20% down. The monthly payments for that home were $1,200 more a month – that’s $14,400 more a year and a difference of half a million dollars over the life of the loan!” said Robert.
Learn more about assumable mortgages.
Offer Accepted
After doing his homework on Roam and understanding the savings he’d realize with the assumable mortgage, Robert was ready to make an offer. He had already been pre-approved and had a real estate agent to help him craft a winning offer. Here’s a snapshot of the offer:
- $535,000 purchase price
- Loan balance assumed: $390,000
- Down payment due at closing: $145,000
- Interest rate: 2.7%, FHA loan
- Total monthly payment assumed: $2,927 (all-in, including taxes, HOA, and insurance)
At a purchase price of $535,000 minus the $390,000 remaining loan amount, he needed to come to closing with a down payment of $145,000 plus about $10,000 in closing costs. “I’ve been in a lucky and very fortunate spot where I had capital on hand to cover the equity and closing costs,” Robert shared.
Although he and his fiancée needed over 20% as a down payment, it felt like a very sound financial decision to Robert. “Potentially up to half a million dollars in savings over the course of the life of the loan if it’s your forever home. And if it’s not your forever home, the assumable mortgage is itself an asset that you can market,” he explained.
Discover how to assume a FHA mortgage.
Navigating the Assumption Process
Completing a mortgage assumption can be arduous for a buyer or seller without experience with the process. There’s a significant amount of paperwork and the steps can be time consuming. Many mortgage servicers still process assumptions using paper forms that have to be filled out offline and faxed. In the case of Robert’s transaction, neither the seller’s agent, nor the buyer’s agent were familiar with the assumption process, and leaned on Roam to quarterback the assumption. Once the offer was accepted, both Robert and the seller signed a third party authorization allowing Roam to manage the process on their behalf.
The first hiccup in the process happened almost immediately after Robert’s offer was accepted. It turns out the mortgage was in the process of being sold from one company to another. To make matters more complicated, during this transition, the new loan servicer accidentally filed Robert’s application as if he was applying for a new conventional loan. However the loan application for a conventional loan had several other information requirements that were not on the assumption application, and the lender automatically denied the application for being incomplete.
Roam was on top of it, identifying these issues as they happened and quickly resolving them and keeping everyone in the loop along the way. “There were a lot of communication errors with the lender that would have been impossible to navigate without Roam’s help. I fully believe that if Roam had not been an intermediary, this deal would not have gone through. Their guidance and persistence is why this deal got to the finish line.”
Paying it Forward
Today, the Rivers have settled into their new home, grateful for their lower monthly payments as they plan for the next big expense – a wedding! Robert has also become an assumable mortgage evangelist in his work with the local VA office. As mortgage interest rates continue to rise, his goal is to help veterans who may benefit from assumable VA mortgages learn about this opportunity.
The monthly savings they’ve achieved thanks to their low interest rate on the mortgage has also enabled them to help a friend in need. “This really gives you the opportunity to live like nobody else. It has given me the ability to pay it forward. A friend I went to school with has endocrine stage 4 cancer. He’s the sole income earner for his wife and 8 children. It’s always been our dream to be in a position to give back to those in need, and it was a blessing that we could afford our dream home and still help our friend pay for his medications,” Robert shared.
What started out as an unknown way to finance a home that seemed too good to be true, actually had the potential to make dreams come true. Just ask Robert.
