What is an assumption of mortgage?

An assumption of mortgage occurs when a buyer takes over the seller's existing mortgage, including its remaining balance, interest rate, and terms, rather than obtaining an entirely new loan. This can be highly advantageous when the seller holds a mortgage with a significantly lower interest rate than what is currently available in the market. However, the lender must formally approve the new buyer before releasing the original borrower from liability.

In practice, mortgage assumptions are relatively uncommon but can come up in the Western Catskills in certain circumstances, particularly with older properties or estates where a seller holds a long-standing, low-rate loan. Government-backed loans such as FHA and VA mortgages are generally assumable with lender approval, while most conventional loans contain a due-on-sale clause that prevents assumption. Buyers interested in this option should ask their attorney and lender to review the seller's existing loan documents early in the process.