We hope this Glossary of Mortgage and Real Estate Terms helps you understand the home buying and financing process. Should you have any further questions, please do not hesitate to contact your Loan Officer for answers.
Additional Terms: # A B C D E F G H I J K L M N O P Q R S T U V W XYZ
B Terms
Back-End Ratio: Also called Debt to Income Ratio or DTI. A lender calculation by which debt (principal, interest, property taxes, insurance, and other monthly bills) is compared with gross monthly income. The calulation is PITI + other monthly debt / gross monthly income = DTI. The trandition standard was 32% or under, but non-traditional mortgage products can go as high as 65% DTI.
Back Taxes: Unpaid property taxes.
Backup Contract: a second contract to complete a real estate deal if the first one falls through. . A Seller may take a backup contract if they are not convinced that their current contract will go through.
Bad Faith: The intent to deceive from the beginning of a deal or contract.
Balloon Mortgage: A mortgage with periodic installments of principal and interest that, at the end of such a period, do not fully amortize (payoff) the loan. The balance of the mortgage due is usually paid in a lump sum at a specified date, usually at the end of the term of such periodic installments. For example, a thirty year mortgage with a 10 year balloon payment.
Balloon Payment: The unpaid, principal amount of a mortgage loan that is due on a specified date, and paid in a lump sum at the end of the term.
Bankruptcy: Legal relief from the payment of all debts after the surrender of all assets to a court-appointed trustee. Assets are distributed to creditors as full satisfaction of debts, with certain priorities and exemptions. A person, firm or corporation may declare bankruptcy under one of several chapters of the U.S. Bankruptcy Code: Chapter 7 covers liquidation of the debtor's assets; Chapter 11 covers reorganization of bankrupt businesses; Chapter 13 covers payments of debts by individuals through a bankruptcy plan. Mortgage Trust refinances borrower's out of Chapter 13. For more information contact your Loan Officer.
Basis Point: 1/100 of 1 % (0.01 %).
Bedroom Community: A residential suburban community often near an employment center that itself offers few employment opportunities.
Beneficiary: The entity or individual that receives income from a trust, insurance policy, estate or trust deed. In a deed of trust, the lender is referred to as the beneficiary.
Bequeath: To specify by a will, the recipient of personal property.
Betterment: An improvement to real estate such as a house, garage, or other building.
Biannual: Twice a year.
Bid: The amount someone (bidder) offers to pay.
Biennial: Every two years.
Bill of Sale: A written instrument giving title of personal property from a Seller to a buyer.
Biweekly: Every two weeks.
Biweekly Mortgage Payment: A mortgage were 50% of the normal monthly payment is due every two weeks versus once a month. This results in 26 mortgage payments annually or the equivalent of 13 monthly payments. Most Lenders charge a fee to switch to a biweekly mortgage payment due to the extra paperwork. Mortgage Trust Group recommends saving the fee and doing the extra payments yourself. Divide your monthly payment by 12 and add this figure to your normal payment each month.
Blanket Mortgage: A single mortgage that covers more than one parcel of real estate.
Boiler Plate: Standard language found in contracts, normally preprinted.
Bona Fide: In good faith.
Bond: A certificate that serves as evidence of a debt and the terms of the loan.
Broker (Real Estate): A state-licensed agent who receives a commission or fee, for bringing buyers and sellers together, and assisting in the negotiation of real estate sales contracts between them
Builder: One who assembles materials in order to fabricate, erect or construct a building; or one who oversees building operations.
Builder Warranty: A guarantee on the quality of construction offered by the developer/builder to the buyer at the time of sale.
Buy Down: A sum of money paid to the lender at closing to reduce the borrower's out-of-pocket monthly payment. A buy down can be temporary or permanent.
Buyer's Broker: An agent hired by a Buyer to find an acceptable property and represent the Buyer's interest in the purchase of that property.
