Assumption of mortgage
Assumption of mortgage is the purchase of
mortgaged property whereby the buyer accepts
liability for the debt that continues to exist.
The seller remains liable to the mortgage lender
(whether the lender is a commercial bank, thrift,
credit union, mortgage banker or mortgage broker)
unless the lender agrees to release him.
For example, a homeowner owes a 30-year mortgage
loan of $250,000 against his house. A prospective
buyer wants to purchase the house and keep the
same mortgage. The buyer pays $50,000 cash for
the equity[1] and assumes the mortgage, becoming
liable for the debt. However, the original owner
remains liable as well.
