Loan assumption, however, allows a buyer to take over the current owner’s mortgage while the loan’s terms — including the repayment period and interest rate — remain the same. Ultimately, it can help people get into a home at a lower interest rate even as the housing market around them becomes more expensive.
Additionally, sellers who can offer loan assumption may have a leg up on others because they can provide the opportunity to lock in low interest rates. In some cases, they can even sell their home at a higher price because the lower interest rate offsets the higher principal amount.