What does "assumable mortgage" mean?

An assumable mortgage refers to a financial arrangement in which a buyer can take over the existing mortgage held by the seller of a property. This can be beneficial for both parties: the buyer may acquire a favorable mortgage rate or terms that are no longer available in the current market, while the seller can facilitate the sale of their property by offering a way for potential buyers to assume an existing loan without needing to secure new financing.

This type of mortgage often includes the stipulation that the lender must approve the transfer, ensuring that the buyer meets the qualifying criteria. The assumption can relieve the seller of remaining liability for the mortgage, eliminating the need to pay off the mortgage entirely upon sale. Overall, it allows the buyer to benefit from the existing financing structure, which can simplify the transaction and potentially save on closing costs.