A
new startup, RetroRate, is launching in 10 states to tap into the potential of assumable mortgages. This lesser-known financing option allows homebuyers to take over a seller's existing low-interest rate loan, potentially saving hundreds or thousands of dollars per month compared to a new loan at today's interest rates.

    RetroRate's founder, Andy Taylor, believes that between 20% and 25% of homes on the market have assumable loans. However, awareness and execution of these transactions are low due to outdated processes and lack of centralized tools. RetroRate aims to change this by creating a searchable database of homes with assumable mortgages and ranking listings based on their financial appeal.

    The company's service is designed to make assumable loans more accessible to buyers and agents. For a fee equal to 1% of the home sale price, RetroRate will help facilitate the assumption process, making it easier for agents to navigate. Taylor's goal is to make assumable loans as common as other financing types, such as 30-year fixed or 5/1 ARMs.

    RetroRate formally launched this month after a beta period with select agents in California, Texas, Florida, and North Carolina. The company prioritized launch markets based on where assumable loan inventory was meaningful and affordability pressures were most acute. While there are caveats to assumable loans, Taylor sees them as opportunities for modernization and believes that RetroRate can significantly reduce friction in the process.

    Taylor is confident that assumable mortgages will remain relevant even if interest rates decline, citing the value of older loans with below-market rates. With RetroRate, he aims to restore affordability and create liquidity in the market, a mission that can be built on regardless of interest rate trends.