Final answer:
Buyers who assume mortgages become personally liable to repay the debt in the event of a default. There is no standard 30% premium for assuming a mortgage, and down payments can vary, with the traditional being 20%, although lower down payments are possible but require mortgage insurance.
Step-by-step explanation:
When buyers assume mortgages, they take on the existing debt of a home loan from the original borrower. Although there might be various costs associated with assuming a mortgage, option 'C. Could be personally liable to repay the debt in the event of a default' is correct. When a buyer assumes a mortgage, they agree to take over the payment obligations and become personally liable for the loan. If they default, they are responsible for the debt.
A common misconception is reflected in option 'B. Must pay a 30% premium for the privilege', which is incorrect. There is no standard premium rate such as 30% for the privilege of assuming a mortgage.
Regarding down payments, the 20% rule is traditional, but not mandatory; lower down payments, as low as 0-3.5%, are possible, albeit generally with the added expense of mortgage insurance. This is particularly relevant for buyers who cannot afford a large down payment but does not directly answer the question of liability when assuming a mortgage.