Finance
What is 'assumable mortgage' and when is it an advantage in the Illinois market?
AA mortgage that can be assumed only by family members
BA mortgage that a new buyer can take over from the seller, potentially at a below-market interest rate; advantageous when current rates are higher than the existing rate✓ Correct
CA loan where the lender assumes the risk if property values decline
DA mortgage guaranteed by the buyer's employer
Explanation
An assumable mortgage allows a new buyer to take over the seller's existing loan, including the original interest rate and remaining term. In periods of rising interest rates (such as Illinois's market in recent years), assuming a seller's below-market rate mortgage can save buyers thousands annually. FHA and VA loans are generally assumable; most conventional loans have due-on-sale clauses preventing assumption. The lender must approve the assumption and the buyer's qualifications.
Related Illinois Finance Questions
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