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Balloon Mortgage
A mortgage loan that requires the remaining principal balance be paid at a specific point in time. For example, a loan may be amortized as if it would be paid over a thirty-year period, but requires that at the end of the tenth year the entire remaining balance must be paid. Balloon Payment The final lump sum payment that is due at the termination of a balloon mortgage. Bankruptcy By filing in federal bankruptcy court, an individual or individuals can restructure or relieve themselves of debts and liabilities. Bankruptcies are of various types, but the most common for an individual seem to be a "Chapter 7 No Asset" bankruptcy, which relieves the borrower of most types of debts. A borrower cannot usually qualify for an "A" paper loan for a period of two years after the bankruptcy has been discharged and requires the re-establishment of an ability to repay debt. Bargain and Sale Deed A deed used to convey title to real property, which usually does not include warranties; if any, they are generally an assertion by the grantor that they have possession of the property. Baseline and Meridian Imaginary lines used by surveyors in locating and describing land under the rectangular survey method. The north-south line is the meridian; the east-west line is the base line. Used mostly in Midwestern states. Basis Original cost of property plus value of any improvement put on by the seller and minus the depreciation taken by him/her. Before and After Method An appraisal method used in condemnation cases where there has been a partial taking of the property. Benchmark A natural or unnatural permanent reference mark or point established for use in measuring differences in elevations. Beneficiary A person who receives and benefits from the gifts or acts of another; one who receives the proceeds from a will, insurance policy, or trust; the lender in a deed of trust. Bequeath The giving of personal property by will. Bilateral Contract A contract in which both parties have reciprocal obligations toward each other. Bill of Sale A written document that transfers title to personal property. For example, when selling an automobile to acquire funds which will be used as a source of down payment or for closing costs, the lender will usually require the bill of sale (in addition to other items) to help document this source of funds. Binder An agreement to cover a down payment for the purchase of real estate as evidence of good faith on the party of the purchaser; shows the receipt of a deposit and outlines the basic terms of the transaction. Biweekly Mortgage A mortgage in which you make payments every two weeks instead of once a month. The basic result is that instead of making twelve monthly payments during the year, you make thirteen. The extra payment reduces the principal, substantially reducing the time it takes to pay off a thirty-year mortgage. Note: there are independent companies that encourage you to set up bi-weekly payment schedules with them on your thirty-year mortgage. They charge a set-up fee and a transfer fee for every payment. Your funds are deposited into a trust account from which your monthly payment is then made, and the excess funds then remain in the trust account until enough has accrued to make the additional payment, which will then be paid to reduce your principle. You could save money by doing the same thing yourself, and you have to have faith that once you transfer money to them that they will actually transfer your funds to your lender. Blanket Mortgage One mortgage covering two or more specific parcels or realty. Blockbusting The discriminatory practice of encouraging members of one race or creed to move in a neighborhood, and then exploiting the situation by persuading residents to sell their houses at deflated prices because of the alleged social deterioration of the neighborhood. Block Interest Interest computed on the original face amount and which remains the same as the principal declines. Bona Fide In good faith, without fraud; genuine; real. Bond Market Usually refers to the daily buying and selling of thirty-year treasury bonds. Lenders follow this market intensely because as the yields of bonds go up and down, fixed rate mortgages do approximately the same thing. The same factors that affect the Treasury Bond market also affect mortgage rates at the same time. That is why rates change daily, and in a volatile market can and do change during the day as well. Boot The payment to satisfy the difference in equities in an exchange, which may be in cash, personal property, note, financing, or anything of agreed upon value. Breach of Contract Violation of any of the terms or conditions of a contract; default; non- performance. Bridge Loan Not used much anymore, bridge loans are obtained by those who have not yet sold their previous property, but must close on a purchase property. The bridge loan becomes the source of their funds for the down payment. One reason for their fall from favor is that there are more and more second mortgage lenders now that will lend at a high loan to value. In addition, sellers often prefer to accept offers from buyers who have already sold their property. Broker Broker has several meanings in different situations. Most Realtors are "agents" who work under a "broker." Some agents are brokers as well, either working form themselves or under another broker. In the mortgage industry, broker usually refers to a company or individual that does not lend the money for the loans themselves, but broker loans to larger lenders or investors. (See the Home Loan Library that discusses the different types of lenders). As a normal definition, a broker is anyone who acts as an agent, bringing two parties together for any type of transaction and earns a fee for doing so. Budget Mortgage A mortgage with payment that covers principal and interest, plus taxes, fire insurance, lease rent, ect. Building Codes Rules established by local governments to regulate construction standards. Building Restrictions Limitations on the use of property or the size and location of improvements established by legislation or by covenants in deeds. Bulk Transfer Any transfer of a major party of the materials, inventory or supplies of an enterprise not in the ordinary course of the seller’s business. Bundle of Rights Ownership concept in real estate, which embraces the rights of possession, use enjoyment, and disposition. Bureau of Conveyances The Hawaii state office which houses all legal documents relative to title to both land court and regular system property recorded since 1848; located in Honolulu. Business Opportunity The assets for an existing business enterprise including its goodwill. Buy down Usually refers to a fixed rate mortgage where the interest rate is "bought down" for a temporary period, usually one to three years. After that time and for the remainder of the term, the borrower's payment is calculated at the note rate. In order to buy down the initial rate for the temporary payment, a lump sum is paid and held in an account used to supplement the borrower's monthly payment. These funds usually come from the seller (or some other source) as a financial incentive to induce someone to buy their property. A "lender funded buy down" is when the lender pays the initial lump sum. They can accomplish this because the note rate on the loan (after the buy down adjustments) will be higher than the current market rate. One reason for doing this is that the borrower may get to "qualify" at the start rate and can qualify for a higher loan amount. Another reason is that a borrower may expect his earnings to go up substantially in the near future, but wants a lower payment right now. |
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