What distinguishes buying property subject to an existing mortgage from assuming a mortgage?

When a buyer purchases property subject to an existing mortgage, it means they are taking ownership of the property while the existing loan remains in the seller's name. In this scenario, the original borrower—the seller—maintains responsibility for the mortgage. This is important because if the buyer fails to make mortgage payments, the lender will still look to the seller for repayment, which underscores that the seller remains liable to the lender even though the buyer is now in possession of the property.

In contrast, when a buyer assumes a mortgage, they take on the responsibility of the debt, and the seller is typically relieved of liability, depending on the lender's approval and the specific terms of the loan. The original lender may require a formal agreement for the buyer to assume the mortgage, which can also involve some scrutiny of the buyer's financial situation.

The other options do not accurately capture the distinction. One does not typically relate to the purchase price, and lender approval is more associated with assumption scenarios rather than outright purchases subject to existing financing. Additionally, while liability can shift based on different agreements, in the case of buying subject to, the continuity of liability for the seller is a key point that differentiates this concept from assuming a mortgage.