What does it mean for a buyer to assume a loan?

When a buyer assumes a loan, it means that the buyer takes over the seller's existing loan. This process typically involves the buyer stepping into the seller's position regarding the mortgage, allowing them to make the monthly payments as if the loan is their own. This can be advantageous for the buyer, especially if the terms of the existing loan are favorable, such as a lower interest rate than what is currently available in the market.

In such scenarios, the lender may or may not need to approve the buyer's assumption of the loan, depending on the terms of the mortgage and the lender's policies. By assuming the loan, the buyer not only takes on the responsibility for the mortgage but may also gain access to the terms already established, which can be beneficial in a changing economic landscape.

Thus, the correct response effectively signifies that the buyer directly acquires the financial obligations tied to the seller’s mortgage, rather than initiating a new loan or altering the initial loan terms.