What is an assignable or assumable mortgage?

What is an assignable or assumable mortgage?

Ron Goodlin (Mortgage Banker and Broker, The Goodlin Group) gives expert video advice on: Is it possible to pay off my mortgage loan early?; Is there a penalty for paying off my mortgage loan early? and more...

A majority of lending institutions out there will not allow you to assign your loan over to somebody else. A person who wants to purchase your home will have to get a new home loan. There's one lending institution that actually tried assignable or assumable mortgages a while ago. Let's say you live at this property now with this low rate at 4% with your loan, and you want to take that rate with you to purchase another house. A bank tried that for a while, but it will never work. The reason is, all these mortgage loans that are closed are all being sold on the secondary market. It's a major investment vehicle that's out there and they constantly need to see these things churning over and over.