Definition
Some properties have assumable loans that you can take over from the seller instead of getting new financing. This can be advantageous if the existing rate is better than current market rates.
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Find my pathAbout this term
Loan assumptions require lender approval. Lower closing costs than new mortgage. Seller liability typically ends. Assumable loans have favorable terms. Interest rates lower than current market attract buyers. Down payment is difference between price and loan balance. Financing contingency standard. Appraisal may still be required. Faster closing timeline possible. Not available on most loans (FHA/VA typically assumable). Qualification standards apply. Strategic advantage if rates favorable. Seller liability released upon approval.
Pro Tip
Assumable mortgages provide advantage if rates are below market. Loan assumption requires lender approval.
Example
Loan assumption at 4% rate saved buyer 1% vs. new financing.