Financial Planning Advices » Financial Terminology » What is an Assumable Mortgage?
What is an Assumable Mortgage?
A type of mortgage, which allows someone else to assume it, is called assumable mortgage.
This means that the home buyer has the ability to take over (or "assume") the existing mortgage of the seller provided that the lender of that mortgage approves.
If interest rates have risen since the time the original mortgage was taken out, the buyer will benefit from the seller's relatively lower-interest-rate mortgage. On the other hand, the seller gets free from the mortgage and buyer is the person responsible for its coverage.
However, assumable mortgages are not easy to find. Additionally, although the mortgage is assumable, the lender can still change the loan terms for the buyer.
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