Glossary

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Balance Sheet
A financial statement that shows assets, liabilities, and net worth as of a specific date. This is generally needed to underwrite people who are self-employed.

Balloon Mortgage
A mortgage that has level monthly payments of principal and interest that do not fully amortize the loan. The balance is due in a lump sum payment at a specified date, usually at the end of the term.

Balloon Payment
The final lump sum payment that is made at the maturity date of a balloon mortgage.

Bankrupt
A person, firm, or corporation ("debtor") that, through a court proceeding, is relieved from the payment of some or all debts, usually after the surrender of all assets to a court-appointed trustee or the reorganization of the debtor's assets and liabilities. Usually, at least two years must elapse from the discharge of the bankruptcy before lenders will consider making a loan to someone who had declared bankruptcy.

Bankruptcy
A proceeding in a federal court in which a debtor who owes more than his or her assets can receive debt relief by transferring his or her assets to a trustee or agreeing to reorganization of assets and liabilities. Usually, at least two years must elapse from the discharge of the bankruptcy before lenders will consider making a loan to someone who had declared bankruptcy.

Basis
Basis is used to compute the amount of any taxable gain or loss when selling a property. It includes the original cost of the property plus closing costs, selling costs and the cost of any improvements made.

Betterment
An improvement that increases property value as distinguished from repairs or replacements that simply maintain value.

Bill Of Sale
A written document that transfers title to personal property.

Binder
A preliminary agreement, secured by the payment of an earnest money deposit, under which a buyer offers to purchase real estate.

Bi-Weekly Payment Mortgage
A mortgage that requires payments to reduce the debt every two weeks (instead of the standard monthly payment schedule). The 26 (or possibly 27) biweekly payments are each equal to one-half of the monthly payment that would be required if the loan were a standard 30-year fixed-rate mortgage, and they are usually drafted from the borrower's bank account. The result for the borrower is a substantial savings in interest.

Blanket Insurance Policy
A single policy that covers more than one piece of property (or more than one person).

Bona Fide
In good faith, without fraud.

Bond
An interest-bearing certificate of debt with a maturity date. An obligation of a government or business corporation. A real estate bond is a written obligation usually secured by a mortgage or a deed of trust.

Breach
A violation of any legal obligation.

Bridge Loan
A loan which provides funds for a homebuyer to make a down payment and pay closing costs on a new home before the present home is sold. Also known as "gap financing."

Broker
A person who, for a commission or a fee, brings parties together and assists in negotiating contracts between them.

Broker Fee
This is fee charge from the broker to paid to his company. See junk fee.

Budget
A detailed plan of income and expenses expected over a certain period of time. A budget can provide guidelines for managing future investments and expenses.

Budget Category
A category of income or expense data that you can use in a budget. You can also define your own budget categories and add them to some or all of the budgets you create. "Rent" is an example of an expense category. "Salary" is a typical income category.

Building Code
Local regulations that control design, construction, and materials used in construction. Building codes are based on safety and health standards.

Buy Down Account
An account in which funds are held so that they can be applied as part of the monthly mortgage payment as each payment comes due during the period that an interest rate buy down plan is in effect.

Buy Down Mortgage
A temporary buy down is a mortgage on which an initial lump sum payment is made by any party to reduce a borrower's monthly payments during the first few years of a mortgage. A permanent buy down reduces the interest rate over the entire life of a mortgage.

Buyer's Attorney's Fees
Fees paid by a homebuyer for legal services and/or advice in conjunction with purchasing real estate.