What Is an Assumable Mortgage?

An assumable mortgage is a type of mortgage in which a new borrower can take over the payments for the original mortgage holder. This type of mortgage is common with VA and FHA mortgages. 

With this type of mortgage, the new home buyer will not have to go through the traditional mortgage approval process. They will have to fill out some documents and the lender will generally want to have a look at their credit. They may also have to fit into certain criteria dealing with income and their total amount of debt. 

This type of mortgage can be advantageous for the buyer and the seller in a real estate transaction. If an individual is trying to sell a home with an assumable mortgage, they will generally have better like because it opens up the opportunities to find buyers. More people will be interested in taking over an assumable mortgage than getting approved for a new one.

For the buyer of a property, this type of mortgage can be very attractive because they may be able to avoid paying excess of closing costs. Since the mortgage is already set up, they do not have to worry about all of the fees that are typically associated with this process.

blog comments powered by Disqus