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Assumption Mortgage
If the seller's existing mortgage does not contain an alienation clause (due on sale clause), it is assumable.
The buyer can simply agree to take over payment of the seller's debt with terms of the note unchanged. The property still serves as the basic security for the loan, but the buyer becomes primarily liable for repayment of the debt. If there is a foreclosure and proceeds are insufficient to satisfy the debt, the lender may sue the buyer for the deficiency.
An assumption is an agreement strictly between the buyer and seller. The buyer assumes liability for the loan, but the seller is not completely release from responsibility; he or she remains secondarily liable. If the lender cannot recover the loan amount from the buyer, or through foreclosure, it may still sue the seller for the deficiency.
In order for the seller to be relieved form this responsibility, he or she must obtain a release form from the lender. In this instance, the lender agrees to accept the buyer as the new mortgagor and to release the seller from all obligations on the mortgage. The lender will normally charge a loan assumption fee on assumable loans, renegotiate the loan assumption fee or renegotiate the interest rate if the mortgage contains alienation clause.