"Mortgage Must be Assumed" & "52% of sale price downpayment" Why?

[Bill E.]

I've recently reviewed an apartment complex that looks interesting however the current mortgage must be assumed. Also, the deal is requiring a downpayment of $1,175,000 (52% of the sale price - asking price is $2,250,000). The current mortgage balance is $1,075,000 fixed at 6.25% due in April 2016 and amortized over 25 years.

Here's my questions - any insights would be greatly appreciated

1. Why must it be assumed - is there a pre-payment penalty?
2. Why must there be a 52% down payment?
3. How is the mortgage factored into the purchase price?
4. Could this be refinanced somehow?
5. How do you see this making sense for a buyer? (i.e. would a buyer assume and then refi if possible? Offer a lower purchase price to make up for the higher mortgage interest rate?)

[Jon Holdman]

1. A prepayment penalty is probably a good guess. The seller doesn't want to have to pay that.
2. Its the difference between the loan you'll have to assume and the asking price. Doesn't necessarily mean that all has to be cash. You might get a loan for part of it or have the seller carry part of it.
3. Same as if you were getting a new mortgage with the same terms.
4. Sure, if you can get the refi loan. Not easy. And, once you assume it, any prepayment penalty becomes your problem.
5. Hard to say. Is it a deal? Do you have the cash? Can you get a loan for the shortage if you don't have the cash? These terms do appear to make the deal less attractive than if you could just get your own financing.