Finance
What is an 'assumable mortgage' and are Pennsylvania mortgages typically assumable?
AAll Pennsylvania mortgages are assumable by law
BAn assumable mortgage can be transferred to a new buyer; conventional mortgages typically have due-on-sale clauses preventing assumption, while FHA and VA loans are generally assumable with lender approval✓ Correct
CAssumable mortgages are only available through PHFA programs
DPennsylvania prohibits mortgage assumptions to protect lenders
Explanation
An assumable mortgage allows a new buyer to take over the original borrower's loan — including the existing interest rate, balance, and terms. FHA and VA loans are generally assumable with lender approval; conventional loans typically have due-on-sale clauses requiring payoff on transfer under the Garn-St. Germain Act. In a rising rate environment (such as 2022-2024 in Pennsylvania), sellers with low-rate FHA/VA mortgages have a competitive advantage because buyers can assume their favorable rate.
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