Glossary of commonly used terms and phrases

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Balance Sheet - A financial statement that shows assets, liabilities, and net worth as of a specific date.
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Balloon Mortgage - A mortgage that has fixed monthly payments that will amortize it over a stated term but that requires a lump sum payment to be due at the end of a specified term.
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Balloon Payment - The final lump sum payment that is made at the maturity date of a balloon mortgage.
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Bankrupt - A person, firm, or corporation that, through a court proceeding, is relieved from the payment of all debts after the surrender of all assets to a court-appointed trustee.
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Bankruptcy - A proceeding in a federal court in which a debtor who owes more than his or her assets can relieve the debts by transferring his or her assets to a trustee.
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Basis Point - A basis point is 1/100th of a percentage point. For example, a fee calculated as 50 basis points of a loan amount of $100,000 would be 0.50% or $500.
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Before-Tax Income - Income before taxes are deducted.
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Beneficiary - The person designated to receive the income from a trust, estate, or a deed of trust.
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Binder or 'Offer to Purchase' - A preliminary agreement, secured by the payment of earnest money, between a buyer and seller as an offer to purchase real estate. A binder secures the right to purchase real estate upon agreed terms for a limited period of time. If the buyer changes his mind or is unable to purchase, the earnest money is forfeited unless the binder expressly provides that it is to be refunded. Broker (See Real Estate Broker)
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Biweekly Payment Mortgage - A mortgage that allows payments to reduce the debt every two weeks (instead of the standard monthly payment schedule). The 26 (or 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.
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Blanket Mortgage - The mortgage that is secured by a cooperative project, as opposed to the share loans on individual units within the project.
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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.
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Bond Financing - A type of financing which is an agreement to repay the principal along with the interest on a specified date.
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Borrower - Any entity that is, or when loan is made will become, the obligor on the loan. For commercial loans, the obligor may be an Individual, Corporation, Partnership, Limited Liability Co (LLC) or a Trust, depending on the loan amount.
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Breach - A violation of any legal obligation.
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Bridge Loan - A form of second trust that is collateralized by the borrower's present home (which is usually for sale) in a manner that allows the proceeds to be used for closing on a new house before the present home is sold. Also known as 'swing loan.'
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Broker (real estate) - A licensed real estate professional who, typically, represents the seller of a property. A broker's duties might include: determining market values, advertising properties for sale, showing properties to prospective buyers, and advising clients with regard to offers and related matters.
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Builder Loans (also developer loans) - These are loans for builders who are financing the construction of multiple properties or spec/model homes before they are sold to an occupant.
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Building Code - Local regulations that control design, construction, and materials used in construction. Building codes are based on safety and health standards.
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Building Line or Setback - Guidelines that limit the distance from the street or adjacent properties where construction may not extend. The building line may be established by building codes, zoning ordinances, or restrictive covenants in deeds or leases.
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Buy Down - Money advanced by an individual (seller, builder, etc.) to reduce monthly payments for a home mortgage either during the entire term or for an initial period of years.
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