What is an assumable mortgage and how does it work?
• An assumable mortgage is a loan that enables a buyer to take over a seller’s mortgage when purchasing a home. Specifically, it is a mortgage that can be sold to a purchaser who promises to “assume” the mortgage debt. When a buyer assumes responsibility for a seller’s existing mortgage, the buyer assumes all the obligations under the mortgage with no change in terms, just as if the original loan had been made to her. The mortgagee can, in turn, enforce the promise made by the purchaser in assuming the mortgage. In order to assume a mortgage, the purchaser must qualify for the loan and pay closing fees, including the appraisal cost and title insurance. Approval by the original lender is also required. Thus, a purchaser’s promise does not relieve the mortgagor of the duty to pay the mortgagee unless the lender consents to this change in the contract. Regardless of the lender’s approval, however, the mortgagor has the right to pay the debt and bring suit against the assuming purchaser fo
