What is an assumable mortgage?

An assumable mortgage is characterized by its transferability, allowing a new buyer to take over the seller's mortgage payments. This arrangement can be particularly advantageous for buyers, especially if the existing mortgage rate is lower than the current market rates. By assuming the mortgage, the new buyer effectively steps into the seller's position, meaning they will continue to make the same payments under the existing terms of the loan without needing to go through the full loan application process again.

This feature can be beneficial in a competitive market where financing terms may be a barrier to potential buyers. It can also simplify the sales process for the seller, as it may make their property more attractive to buyers who want to take advantage of favorable loan terms.

The other options incorrectly describe the nature of an assumable mortgage. Some mortgages do not allow for transfer to another party and might require a new application process or are limited to cash buyers, but these do not reflect the essence of an assumable mortgage, which is specifically about the ease of transferring existing financing to a new owner.