Assumption (Mortgage)

Definition: A mortgage assumption occurs when a new borrower takes on the existing loan obligation under the applicable assumption terms.

Example

A qualified buyer completes an approved assumption of the seller's loan rather than obtaining an entirely new loan.

Keep the distinction clear

Assumption is different from taking title subject to a loan without undertaking personal liability. The original borrower is not automatically released merely because another person assumes.

Related terms

Subject to the Mortgage · Novation · Due-on-Sale Clause

Keep studying

Mortgages: Borrower, Lender, Ownership, and Key Clauses

References: CFPB Regulation Z: mortgage assumptions

Pronunciation (US): uh-SUMP-shuhn (capitals show stress)

Pronunciation reference: Merriam-Webster