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What Is an Assumable Mortgage?


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TERMINOLOGY

An assumable mortgage is a type of mortgage that allows another individual to take over the loan. Here are the basics of an assumable mortgage.

Assumable Mortgages

With this type of mortgage, a home seller can sell a property and include the mortgage with the deal. The buyer will not have to go through the process of shopping for a new loan or pay additional closing costs with this type of loan. He can simply purchase the house and the mortgage as a single package.

Process

When a seller offers to allow a buyer to assume the mortgage already on the property, the buyer is going to have to go through a process with the lender. The lender is going to want personal information about the new buyer, and it is are going to check up on him. The lender will pull the buyer's credit file and make sure that he makes enough money to support the mortgage payment.

Advantages

This type of mortgage can provide you with a definite advantage when the interest rate on the loan is lower than what you can get in the market. Another advantage to taking this type of loan is that that is much easier than finding a new mortgage.