A Little-Known Way Home Buyers Can Beat High Mortgage Rates

Assumable mortgages — or low-rate mortgages that home buyers can take over from home sellers — are making a comeback. The process can be challenging.

Home prices were already high when Ellen Harper, a software architect living in Atlanta, started searching for a house in 2021. But she couldn’t have anticipated the quick surge in interest rates the following year and, even with a large down payment, the new math made her uneasy.

Earlier this year, however, she stumbled upon what felt like a portal to the not-so-distant past: listings of thousands of homes that come with a low-rate mortgage, which can be transferred from the existing homeowner to a new home buyer, known as an assumable mortgage.

Ms. Harper, who is in her 50s, managed to snag one of these homes, closing two weeks ago on a four-bedroom brick colonial, in Fairburn, Ga., with a $1,400 monthly payment. It’s an amount she’ll be able to comfortably afford into retirement thanks, in large part, to a 2.49 percent mortgage rate. That’s less than half the current rate of 7.09 percent on 30-year-fixed loans, the most popular type of mortgage.

“I didn’t want to get a bad mortgage and be in a ball and chain situation where all I would be able to do is pay the mortgage,” Ms. Harper said. She found her home through Roam, a start-up that went live in September that lists homes with assumable low-rate loans, and assists buyers through the process. “There were other homes — they were nice and everything,” she added, “but I went for the lowest rate I could find.”

Assuming a mortgage isn’t some type of gimmick; it’s a built-in benefit on certain government-backed mortgages, as long as the new owners qualify. The process won’t work for all would-be buyers because there are several hurdles they may need to clear before they can claim the keys, often including a hefty down payment. For home sellers, it can be advertised alongside marble countertops, to attract more potential buyers.

Last popular in the 1980s, when mortgage rates topped 18 percent, many real estate professionals are unaware that assumable mortgages are even possible. But as mortgage rates continue to rise, word is spreading. Realtor.com, a home listing website, recently started tagging assumable properties and making them searchable. And more companies — from small, bootstrap operations to start-ups like Roam — are seizing the opportunity, compiling lists or maps of eligible properties, and charging homeowners a fee to help navigate what can be a nerve-racking assumption process.