Assumption of Mortgage

The taking of a title to property by a grantee wherein grantee assumes liability for payment of an existing note secured by a mortgage or deed of trust against the property, becoming a co-guarantor for the payment of the mortgage or deed of trust note. An assumption of a mortgage occurs when a buyer takes over the seller’s existing mortgage loan rather than obtaining a new loan, meaning the buyer agrees to continue making payments on the remaining loan balance under the same interest rate and terms. This can be beneficial when the existing mortgage has a lower interest rate than current market rates, but it is only possible if the loan is assumable and the lender approves the buyer based on their credit and financial qualifications. In many cases, the buyer must pay the difference between the purchase price and the remaining loan balance, and it is also important to determine whether the seller will be released from liability, since some loans allow the lender to hold the original borrower responsible if the new buyer later defaults.