What is an assumable mortgage?

An assumable mortgage is a type of loan agreement where one party agrees to take over the responsibility of the loan from the original borrower. This type of agreement is commonly used in Washington when a home is sold from one party to another. The buyer of the home agrees to take over the responsibility of the existing loan, meaning they assume the remaining loan balance and make payments according to the existing loan terms. Assuming a mortgage is beneficial to both parties because it eliminates the need to get a new loan or to refinance the existing one. This can be particularly beneficial for the buyer, as they could get a lower interest rate than what is currently available on the market. In addition, assumable mortgages can be beneficial for buyers in certain high-cost markets, as they may enable them to purchase a home with a lower down payment than would otherwise be necessary. Though assumable mortgages are allowed in Washington, banks typically require that buyers go through the approval process to ensure they have the financial capacity to take on the mortgage. This means buyers must have a good credit score, have sufficient income and have the funds necessary to close on the loan. If the buyer meets these requirements, they can then move forward with assuming the mortgage.

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What is an assumable mortgage?

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