Definition of Assumable mortgage:
An assumable mortgage is a type of financing arrangement whereby an outstanding mortgage and its terms are transferred from the current owner to a buyer. By assuming the previous owner's remaining debt, the buyer can avoid having to obtain their own mortgage.
Loan agreement that does not have the alienation clause or the due-on-sale clause commonly included in such agreements. Assumable mortgage may be transferred to (can be assumed by) a new borrower on the same terms and rates as the original mortgage, upon payment of assumption fee. Also called assumable loan.
Many homebuyers typically take out a mortgage from a lending institution to finance the purchase of a home or property. The contractual agreement for repaying the property loan includes the interest that the borrower has to pay per month in addition to the principal repayments to the lender.
How to use Assumable mortgage in a sentence?
- The only two types of loans that are assumable are loans insured by the Federal Housing Administration and the US Department of Veterans Affairs.
- An assumable mortgage is an arrangement in where an outstanding mortgage and its terms can be transferred from the current owner to a buyer.
- When interest rates rise, an assumable mortgage is attractive to a buyer who takes on an existing loan that was secured with a lower interest rate.
Meaning of Assumable mortgage & Assumable mortgage Definition