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Back ratio
The ratio of monthly housing costs (principal, insurance, taxes, and
interest) plus regular monthly payments to gross monthly income,
used by the lender to evaluate an applicant's qualification for a
loan; typical back ratios are between 32 - 45 percent
Balloon mortgage
A mortgage with level monthly payments over a stated term, but which
requires a lump sum payment in full due at the end of an earlier
specified term
Balloon payment
The final lump sum payment that is made at the maturity date of a
balloon mortgage, which is larger than preceding regular payments
Bankruptcy
A legal proceeding in a federal court in which a debtor who owes
more than the total of his or her assets can surrender those assets
to the Bankruptcy Court, thereby being relieved of the future
obligation to repay his or her unsecured debts; a Trustee in
Bankruptcy administers the assets, selling them to pay as much of
the debt as possible
Bargain and sale deed
A deed that carries with it no warranties against liens or other
encumbrances, but which implies that the grantor has the right to
convey title
Basis
The financial interest an owner of an investment property has, as
determined by the Internal Revenue Service, in order to determine
annual depreciation and gain or loss on the sale of the asset
Adjusted Basis: When property is purchased, the owner's basis is
calculated to be the property cost plus the value of any capital
expenditures for improvements made, minus any depreciation taken
Benchmark
A permanent reference mark made on a piece of property for the sake
of surveyors
Beneficiary
The person named to receive income from a trust, an estate, or a
deed of trust
Bequeath
To gift or transfer personal property to another party, executed via
a will
Betterment
An improvement to property that increases its value, as opposed to
repairs or changes that maintain its value only
Bid
A financial offer to purchase a property
Binder
A preliminary agreement for the purchase of real estate, secured by
the payment of an earnest money deposit which evidences the
purchaser's good faith and intent to complete the purchase
Blanket loan
A mortgage covering more than one parcel of real estate, which
provides for each individual parcel's partial release from the
mortgage upon repayment of a portion of the debt
Bond
A written financial obligation, usually secured by a mortgage or a
deed of trust, and often posted with the Court, to guarantee against
loss incurred with a potential claim
Breach
Failure to follow through on a contractual promise or legal
obligation
Bridge loan
A form of second trust, collateral for which is the borrower's
present home, usually taken on to allow the proceeds from the sale
of the borrower's present home to be used to close on a new home,
before the previous home is sold
Broker
An intermediary who assists in negotiating contracts between two or
more parties, for a fee; in real estate, a broker is licensed to
assist in the purchase, selling, rental or managing of real estate;
the broker's services will vary, depending on whether he or she is
employed by the seller or the buyer
Building code
An ordinance that specifies minimal standards for construction,
alteration, or demolition of a building, set for the sake of safety
Building Restriction Line (or "Set-back")
The minimal distance from the road where a building may be
positioned, which appears in the original plat of subdivision,
restrictive covenants, or in zoning ordinances and building codes
Bureau of Land Management
The branch of government responsible for the surveying and
management of public lands
Buy-back agreement
A written agreement which specifies the conditions under which the
seller is allowed to repurchase the property, usually restricted to
a certain period of time and to a price stated in the agreement
Buydown
When the lender or home builder lowers the interest rate on initial
payments on a loan, often for the first few years, allowing a
borrower whose income is expected to increase in subsequent years to
qualify for a loan they otherwise are currently not qualified for
Buyer-agency agreement
When the broker is the agent for the buyer and is financially
obliged to the buyer
Buyer's market
When the real estate buyer is at advantage because there is more
supply of houses or real estate available for sale than there is
demand, thus lowering prices |
