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An assumable mortgage is a loan that allows a new buyer to take
over the financial obligation of the loan with no change in the
terms of the loan from the seller. The lender must be
notified and agree on the buyer assuming the mortgage and may
require the new buyer to qualify for the loan. Also, there
are fees for the buyer associated with an assumable mortgage
such as closing fees, including the costs of the appraisal and
title insurance.
With
an assumable mortgage, a buyer can obtain a below market
interest rate when rates are higher, plus save on the costs of
creating a whole new mortgage. Now that rates are rising,
and may rise further, we can expect that assumable mortgage
loans will receive increasing attention.
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