Assumption

When a buyer takes over the seller' s mortgage upon purchasing a home

Assumptions happen with an assumable mortgage, which allow a buyer to take over an existing mortgage. The seller no longer has to pay off the rest of the loan and the buyer can strike gold if the assumable mortgage has a lower interest rate than rates on new loans. Note that in case of foreclosure, the seller, not the buyer, can be held liable if the property sells for less than the loan' s balance.

See: Assumable mortgage