Assumption of mortgage involves assuming the obligations of a mortgagor toward a mortgagee, usually as part of the purchase price of real estate. This entails the purchaser taking personal liability for the debt unless a novation releases the original borrower.
Any financing arrangement other than a traditional mortgage from a third-party lending institution. Creative financing devices include loans from seller, balloon-payment loans, wraparound mortgages, assumption of mortgage, sale and lease-backs, land contracts, and alternative mortgage instruments.
A mortgage assumption is a financial arrangement where a buyer takes over the seller's existing mortgage, continuing to make payments under the same terms.
