What does an Assumable Mortgage involve?

An assumable mortgage involves the buyer taking over the seller's existing mortgage. This means that when a property is sold, the new buyer can step into the seller's shoes and assume responsibility for the remaining mortgage payments on that loan. This can be advantageous for the buyer if the existing mortgage has a lower interest rate than current market rates, allowing them to avoid taking out a new mortgage at a higher rate.

The process typically requires the lender's consent, ensuring that the buyer is financially qualified to take on the mortgage obligations. This arrangement can simplify the transaction for both the seller and the buyer and can make the property more attractive in a competitive market because it may offer favorable financing terms.

In contrast, the other options refer to different scenarios or concepts in mortgage transactions. Thus, understanding the specifics of how assumable mortgages work is crucial for anyone involved in real estate transactions.