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With $3 million in new seed funding, mortgage loan platform Roam is expanding its reach to help buyers in new markets like Chicago, Jacksonville, and Tucson “back out” at rates not seen in years Financing a Home Purchase.
Technically, any seller who is still paying off a government-backed Federal Housing Administration (FHA), Virginia (VA), or U.S. Department of Agriculture (USDA) mortgage can offer qualified buyers to assume their loan Choice of balance – no matter what interest rate they take out the loan. But the buyer also needs to reimburse the seller for any equity they have built up in the home, so they usually need to take out a second mortgage.
Announcing its second round of funding since launching last year, Roam said it is now partnering with home equity lender Spring EQ to offer second mortgages. Roam says it can typically offer a blend of rates between 4% and 5%, depending on the mortgage rate they assume and the size of the second loan (see listings on the company’s website).
Raunak Singh
“For a lot of people, this feels like a portal to the past, right?” Roam founder and CEO Raunaq Singh told Inman. “It’s like a way of going back in time to buy a home… They’re not missing out on being able to buy a home in 2021 at such low interest rates.”
Roam announced in September a $1.25 million seed round led by Founders Fund partner Keith Rabois, and has raised a total of $4.25 million. The latest round of seed funding was also led by Rabois, with new investors including DoorDash CEO Tony Xu, Figma CEO Dylan Field and Upstart co-founder Paul Gu.
Roam helps homebuyers find homes that qualify for mortgages and manages the entire process on behalf of buyers, sellers and agents, charging buyers a 1% fee through closing costs. Roam said it now serves 35% of U.S. households through FHA and VA loans as it expands into new markets.
Singh said demand from buyers, sellers and agents has been strong and the company plans to offer services nationwide by the end of the year.
After the company was featured in a May 9 feature New York Times Singer said he’s received hundreds of emails from buyers, sellers and agents wondering, “When are you coming to my town?”
Before partnering with Spring EQ, Roam would connect homebuyers who needed a second mortgage with a number of smaller, preferred partner lenders, which could be an uncertain, fragmented process, Singh said.
Partnering with Spring EQ allows for economies of scale and streamlined processes, and because Roam is not compensated for referring borrowers to Spring EQ, they can get better rates.
“They take what they might otherwise pay us as a retail partner and build that into their pricing,” Singer said. “So the customer gets a significant discount and that’s how they win. We now have a national of lenders who can work with you in any state you want to buy a home in, plus we’ll give you very competitive prices because rebates apply to customers.
The relationship with Spring EQ is not exclusive, as Roam does not receive compensation.
“We are happy to direct customers to the person who offers the lowest price and provides the best service in the shortest time,” Singh said.
In theory, any mortgage lender can help homebuyers explore their options for taking on a mortgage when buying a home. New American Funding claims on its website that FHA loans assume potential savings in closing costs compared to conventional loans.
Roam, along with competitors like FHA Pro and subscription-based AssumeList, say they can also help buyers find homes with affordable mortgages. Multiple listing services often have a “Cash on Existing Loan” box that real estate agents can check to indicate an assumable loan, and homebuyers can search Realtor.com by checking the box for an assumable mortgage in the price drop-down menu. .
Singer said Rohm also has expertise in dealing with loan servicers, which can be tricky when transferring a mortgage from seller to buyer.
“We make assumptions about every major service provider, and we know most of the people who run customer service departments, so we can make sure customers get the best service possible,” he said. “If there are any issues with their files that are not being addressed promptly, we know who to escalate the issue to to make sure it’s clear.”
Roam claims its typical buyer saves $12,000 per year compared to buying a home with a traditional mortgage and can close in 45 to 60 days.
In December, the Department of Veterans Affairs (VA) warned lenders and servicers of their obligation to process assumptions promptly and outlined penalties for noncompliance.
Chris Gardner, founder and CEO of FHA Pros, suggested in a Feb. 29 post: “While high interest rates make most loans attractive to buyers, lenders and servicers are completely wary of the influx of commitment requests. Not prepared.
“The cynic in me tells me that this attitude and incompetence is intentional, as these companies would rather pay off low-rate loans than continue lending, have them return capital to shore up damaged balance sheets, or lend out [then-]The current interest rate is 8%.
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