Define "assumption" concerning a mortgage loan.

"Assumption" concerning a mortgage loan refers to the transfer of the mortgage obligation from one borrower to another. When a mortgage is assumed, the new borrower takes over the responsibility for repaying the loan under the same terms originally established. This can be beneficial for both the buyer and the seller, as the buyer may inherit a lower interest rate compared to the current market rates, while the seller can transfer their existing mortgage without needing to pay it off completely.

This concept is particularly relevant in real estate transactions where buyers want to take over an existing loan rather than secure new financing. Understanding assumption is crucial for mortgage professionals as it can impact the structuring of deals and the advising of clients on potential financial benefits. It’s also important to note that not all loans are assumable; whether an assumption is allowed often depends on the loan terms and the lender’s policies.