Question:

What is an assumable mortgage?

Answer:

There is a specific type of mortgage loan where the property on sale is transferred to the buyer along with existing mortgage on the property. The buyer pays the seller the difference between the existing debt and the desired price and assumes the loan. Hence, this is called assumable mortgage.

Assumable mortgages are a rare type. Most lenders are trying to avoid them as sometimes it is difficult to track responsibility for paying off the debt. ARMs are most common among the assumable mortgages offered today.

As a buyer with a low credit rating you may be looking for homes with assumable mortgage with better rates than you could possibly get on a mortgage otherwise. Or simply the existing rate on the assumable mortgage may be better than the ones currently on the market.

If you are exploring the opportunity of assuming someone else's loan instead of taking a brand new one, be sure to compare rates and closing costs.

If you are a seller, you may like to check how mortgage liability is transferred according to the law of the state. You may find out that even if you transfer the loan to the buyer of your property, you are still liable for the assumed mortgage until settled in the full.

Mortgage rates hit their lowest since 1955. Ask the home loan experts we recommend Quicken Loans how to take advantage of them.
Was this Mortgage QnA helpful?
Not at all
  • Currently 2.9/5 Stars
  • 1
  • 2
  • 3
  • 4
  • 5
Definitely
Add to this Answer

Mortgage QnA is not a common forum. We have special rules:

  • Post no questions here. To ask a question, click the Ask a Question link
  • We will not publish answers that include any form of advertising
  • Add your answer only if it will contrubute to the quality of this Mortgage QnA and help future readers
If you have trouble reading the code, click on the code itself to generate a new random code. Verification Code Above:
Bookmark and share this QnA: