what is an assumable mortgage 
an assumable mortgage is a type of home financing arrangement where an outstanding mortgage and its terms are transferred from the current owner to the buyer by assuming the previous owner s remaining debt the buyer can avoid obtaining their own mortgage different types of loans can qualify as assumable mortgages though there are some special considerations to keep in mind investopedia mira norianunderstanding assumable mortgagesif you are buying a house you may take out a mortgage from a lending institution to finance the purchase of the home or property the contractual agreement for repaying the mortgage includes paying the principal payments plus interest to the lender if you decide to sell your home later you may be able to transfer the mortgage to the homebuyer in this case the original mortgage taken out is assumable 1an assumable mortgage allows a homebuyer to assume the current principal balance interest rate repayment period and any other contractual terms of the seller s mortgage rather than going through the rigorous process of obtaining a home loan from a bank a buyer can take over an existing mortgage there could be a cost saving advantage if current interest rates are higher than the interest rate on the assumable loan in a period of rising interest rates the cost of borrowing also increases when this happens borrowers will face high interest rates on any loans for which they are approved an assumable mortgage may have a lower interest rate an attractive feature to buyers if the assumable mortgage has a fixed interest rate it will not be impacted by rising interest rates a mortgage calculator can be a good resource to budget for the monthly cost of your payment an assumable mortgage is attractive to buyers when the existing mortgage rate is lower than current market rates 