What is an assumable mortgage?

An assumable mortgage is a type of mortgage that allows a buyer to take over the seller's existing mortgage under the same terms and conditions. This means that when the property is sold, the buyer can "assume" the remaining balance of the mortgage, continuing payments as the seller had. This arrangement can be particularly advantageous as it may allow the buyer to enjoy lower interest rates or more favorable loan terms than what is currently available in the market.

In addition, an assumable mortgage can simplify the transaction process for both parties and may help in transferring equity effectively between the seller and buyer. Such mortgages often come equipped with necessary stipulations or conditions; however, they offer a practical route for buyers, especially in a fluctuating interest rate environment.

The other options outline different types of mortgages or lending conditions but do not capture the essence of what it means to have an assumable mortgage.