What is the primary purpose of a mortgage reduction certificate?

The primary purpose of a mortgage reduction certificate is to confirm an assumption of existing loans. When a property is sold and the buyer wishes to assume the seller's existing mortgage, a mortgage reduction certificate is often required to verify the current balance and terms of the mortgage. This document provides necessary details about the remaining principal due on the mortgage and the terms that the buyer will need to agree to in order to assume the loan.

The certificate essentially acts as a verification tool, ensuring that all parties involved in the transaction are aware of the mortgage's current status, which aids in a smooth transfer of the financial obligations associated with the property. This is particularly important for lenders and buyers as it clarifies the financial framework before the loan is assumed, ensuring that the buyer is fully informed about what they are taking on.

Other options focus on aspects like property ownership, summarizing sales transactions, or merely stating loan repayment terms, but they do not capture the specific role of the mortgage reduction certificate in the context of loan assumptions.