What type of financing entails the buyer taking over the seller's obligations?

The correct choice reflects a situation where the buyer assumes the existing mortgage of the seller, effectively taking on the obligation to repay the loan under its current terms. This process is known as an "assumption of mortgage."

In this arrangement, the buyer becomes responsible for making the monthly mortgage payments and adheres to the loan's original conditions, including interest rates and timelines. This can be beneficial for the buyer if the existing mortgage has favorable terms compared to current market rates.

This option is distinct from refinancing, which involves the borrower taking out a new loan to pay off the existing one, often to secure better terms or lower payments. Leverage financing refers to using borrowed funds to increase the potential return on investment, and equity financing involves raising capital through the sale of shares, which does not relate to taking over an existing obligation.

Understanding these distinctions helps clarify how an assumption of mortgage functions in real estate transactions, where buyers take on seller obligations as part of the financing process.