Is It Mortgage Assumption or Subject to Mortgage?

Assuming an existing mortgage when buying a home is quite different from buying subject to an existing mortgage. A loan assumption will always require the approval of the lender. That's because you're assuming the liability for the mortgage from the previous borrower. Many loans today are not assumable. Should you assume a mortgage, the original borrower is no longer liable, and you are liable for payments on the loan and you will be the party named in the foreclosure action.

When you purchase the property subject to an existing loan, the original borrower is not released from liability. As the purchaser you will assume the payments and hopefully make them on time as required. Should the loan become delinquent, the original borrower is named in any action or subsequent foreclosure. Should you purchase the property subject to a mortgage, and the person from whom you purchased it had done the same, the original borrower at the beginning of the chain is still liable.