An assumable mortgage is any mortgage with a clause that allows another party to assume the legal obligation. With this type of mortgage, the property owner can transfer it to a qualified buyer. It allows the buyer to purchase the property without their own mortgage. Most mortgages are not assumable. Home buyers often look for assumable mortgages when interest rates are high. They can assume a lower rate mortgage and save money on interest. One challenge of an assumable mortgage is that the buyer may have to come up with additional funds or funding to cover the complete cost of the property. For example, let’s say the price of the property is $200,000. If the remaining balance of the mortgage is $100,000, the buyer needs to come up with $100,000 to cover the difference. This often means getting a mortgage anyway.
