Assumption Clause
Definition of 'Assumption Clause'A provision in a mortgage contract that allows the seller of a home to pass responsibility to the buyer of the home for the existing mortgage. In other words, the new homeowner assumes the existing mortgage. There are typically many conditions and a fee required in an assumption clause. |
|
Investopedia explains 'Assumption Clause'An assumption clause can be an attractive selling point for a homeowner if the interest rate on the existing mortgage is lower than current market interest rates. In addition, loan settlement costs for the buyer can be avoided. However, there are many hurdles to get over in an assumption. For example, most mortgages have due-on-sale clauses which prevent assumptions, and the remaining principal balance of the existing mortgage is likely to less than the sales price of the home. |
Related Definitions
Articles Of Interest
-
Understanding Your Mortgage
We walk through the steps needed to secure the best loan to finance the purchase of your home. -
Make A Risk-Based Mortgage Decision
Find out how to choose which mortgage style is right for you. -
How Interest Rates Affect The Housing Market
Learn how rate changes can affect home prices and how you can keep up. -
4 Steps To Attaining A Mortgage
It starts with knowing your choices as well as your price range. We show you how to get there. -
Understanding The Mortgage Payment Structure
We explain the calculation and payment process as well as the amortization schedule of home loans. -
6 Tips For Selling Your Home Fast
Find out what you can do to stand out from the competition and make your home an easy sell. -
5 Smart Ways To Use Your Tax Return
This year, find out how to stretch your tax refund further to strengthen your future. -
Common Liabilities That Hurt Your Net Worth
Every penny that you keep out of the liability side of the net worth equation essentially ends up on the asset side. -
The Dangers Of A Reverse Mortgage
In many circumstances, a reverse mortgage can be a risk to your financial security. Here are six dangers you should consider before signing on the bottom line. -
Automatic Cancellation Of PMI When You're Underwater On Your Mortgage
You might be suprised to learn that after reaching certain criteria, your PMI will be automatically cancelled.