Terminology: B

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.

Balance Sheet

A financial statement that shows assets, liabilities, and net worth as of a specific date.

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.

Batter Boards

Temporary L-shaped wooden boards placed outside of the footing aimed to align the placement of the foundation.

Before-Tax Income

Income before taxes are deducted.

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.

Bill of Sale

A written document that transfers title to personal 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.

Biweekly Mortgages

Biiweekly mortgages are structured in a similar fashion as traditional, fixed-rate, fully amortizing mortgage. However, you make your payments every 14 days instead of once a month. The monthly payment is split in half, resulting in the same total monthly mortgage, but the resulting 26 and sometimes 27 biweekly payments a year translate into 13 monthly payments, or one extra monthly payment per year. If you are looking to build up equity in your home faster without the higher mortgage payments that come with a shorter-term mortgage, you may want to consider the biweekly mortgage. Payments can be deducted from your bank account and scheduled to coincide with your payroll deposits to simplify budgeting. Lenders may charge an initial set-up fee to automatically debit your checking account.

Biweekly 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).

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.

Blanket Mortgage

The mortgage that is secured by a cooperative project, as opposed to the share loans on individual units within the project.

Bona Fide

In good faith, without fraud.

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.

Broker's Price Opinion

A comparison of the sale prices of similar properties (e.g., size, style, location, amenities) in a given area, for the purpose of estimating the fair market value of a property, also called Comparable Market Assessment (CMA) or a Comparative Market Analysis.

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.

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.

Buydown 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 buydown plan is in effect.

Buydown Mortgage

A temporary buydown 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 buydown reduces the interest rate over the entire life of a mortgage.

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.