Certified Apartment Portfolio Supervisor (CAPS) Practice Exam - Module 2

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Prepare for the CAPS Exam with a comprehensive study of Module 2. Utilize our practice resources filled with flashcards, multiple choice questions, and thorough explanations to ensure your success!

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What characterizes an assumable mortgage?

Allows transfer of the loan terms to a new buyer
Commonly issued by private lenders
Applies solely to commercial properties
Not available for government programs

The correct answer is: Allows transfer of the loan terms to a new buyer

An assumable mortgage is characterized by the ability to transfer the existing mortgage’s loan terms from the current borrower to a new buyer. This means that a buyer can take over the seller's existing mortgage, assuming the responsibility for the remaining balance and adhering to the same terms, such as interest rate and payment schedule. This type of arrangement can be beneficial for both parties; the seller can find a buyer more easily if the mortgage terms are favorable, and the buyer can secure a loan without having to go through a complete application process from scratch. The characteristics of an assumable mortgage do not inherently depend on the type of lender, ownership, or that it applies solely to any specific property type. The common misconception might stem from the fact that while assumable loans can be a feature of certain government-backed loans like FHA or VA loans, they aren't limited to a particular lender category or property type. Therefore, the correct answer clearly emphasizes the transferability of the loan terms, which is the defining trait of an assumable mortgage.