What is an "assumable mortgage"?

An assumable mortgage is a mortgage that can be transferred from the original borrower to a new buyer, allowing the new buyer to take over the remaining balance of the mortgage under the same terms as the original loan. This characteristic makes assumable mortgages particularly appealing in situations where interest rates have increased since the loan was established; buyers can benefit from the potentially lower, fixed-rate terms of the original mortgage. This feature also facilitates the sale of the property, as it can attract buyers who may otherwise be deterred by higher prevailing interest rates.

In contrast, the other options define different types of mortgage features or programs that do not pertain to the concept of assuming a mortgage. For instance, a mortgage that applies only to commercial properties does not encompass the concept of transferability and assumes a different market focus altogether. Similarly, defining a government-backed program does not relate to the personal transferability of a mortgage's obligation, and mortgages with adjustable interest rates do not reflect the fixed-term take-over nature of assumable mortgages.