In a bid to make iBuying more lucrative for buyers and sellers, Opendoor has partnered with assumable mortgage platform Roam.
The move should make it easier for buyers looking for an Opendoor property to also identify the ones with an assumable mortgage attached.
Many mortgages are assumable, and because existing homeowners have such low fixed-rate mortgages these days, the practice has finally become attractive.
The partnership should help surface more of these loans and allow Opendoor buyers to lean on Roam’s expedited assumption process.
It could also make more home purchases pencil if the buyer is able to take advantage of a lower blended interest rate.
Opendoor and Roam Join Forces in Assumable Mortgage Push
There were rumblings of a partnership between these two companies on social media platform X for a while.
And now they’ve finally announced a collaboration that will insert Roam’s assumable mortgage tools into the Opendoor ecosystem.
Moving forward, prospective home buyers shopping for properties on Opendoor will be able to see which sellers have assumable mortgages.
All types of home loans are assumable, including FHA loans, VA loans, and USDA loans.
However, mortgages backed by Fannie Mae and Freddie Mac, known as conforming loans are not.
Roam makes it easy to see which properties have assumable mortgages, and they also help facilitate what can be a tricky and time-consuming process.
Opendoor is an iBuyer platform that allows home sellers to part with their properties without using a real estate agent, or making any improvements, staging, etc.
Now that mortgage rates are markedly higher than they were just three years ago, loan assumptions are beginning to make a lot of sense.
For example, if a home buyer can assume a fixed-rate mortgage set at 2.75% instead of having to take out a new one at 6.25%, it can be a major money-saver.
And many of these loans still have a good chunk of the loan term remaining because mortgage rates hit record lows in 2021.
That means the 30-year fixed mortgages taken out at the time still have a good 25 years remaining.
Opendoor Home Buyers Can Now Use Roam’s Assumable Mortgage Tools and Transaction Support
However, there is the matter of the assumption gap, which is the difference between the sales price of the property and the remaining loan balance.
To bridge the gap, home buyers need a down payment, but often it can be quite wide as these properties have increased in value significantly as well.
Roam addresses this issue by allowing borrowers to take out a piggyback second mortgage.
For example, say a home is selling for $500,000 and has an outstanding loan balance of $375,000.
The home buyer can assume the loan, but that still leaves a $125,000 shortfall. Perhaps they don’t have a down payment of $125,000, but they can put down $50,000.
They can get a second mortgage from Roam’s partner for the remaining $75,000 and then they’re all square.
Together, these two loans will have a blended interest rate, which will be higher than the first mortgage rate.
Say a 2.75% first mortgage and a 7% second mortgage. But even then, it’ll be a lot lower than a 6% mortgage.
Ideally, this partnership will expand the reach of assumable mortgages and ensure more of them don’t go to waste from property owners sell.
Initially, Opendoor will identify eligible properties with assumable mortgages and bring in Roam to assist qualified sellers looking to pursue a higher sales price and a faster closing.
That includes eligibility coordination between the two platforms, along with home buyer/seller education, and real estate agent tools.
Over time, the pair may deepen the integration to provide more value to home buyers and sellers, and make both iBuying and loan assumptions more attractive.
Before creating this site, I worked as an account executive for a wholesale mortgage lender in Los Angeles. My hands-on experience in the early 2000s inspired me to begin writing about mortgages 19 years ago to help prospective (and existing) home buyers better navigate the home loan process. Follow me on X for hot takes.