What is an assumption of mortgage?

An assumption of mortgage refers specifically to the process by which a buyer takes over the seller's existing mortgage and assumes responsibility for the loan payments. This often occurs in real estate transactions where the buyer agrees to continue making payments on the seller's loan, effectively stepping into their shoes and taking on the remaining balance of the mortgage. This arrangement can be beneficial for the buyer if the current interest rate on the existing mortgage is lower than the prevailing market rates, allowing them to save money on interest costs.

In this context, the other options do not accurately define the term. The negotiation of new loan terms refers to altering the conditions of the mortgage, which is distinct from assuming a mortgage. The sale of property with an existing mortgage does not inherently imply that the buyer is assuming the loan unless explicitly stated in the transaction terms. Finally, refinancing involves obtaining a new loan to pay off the existing mortgage, which is a separate process from assuming an existing loan.