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Glossary of Terms - B

Back-Up Offer:

When an offer is accepted contingent on the fall through or voiding of another offer that previously accepted on the property.

Balance Sheet:

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

Balloon Mortgage:

A mortgage that has level monthly payments that will amortize it over a stated term, but that provides for a lump sum payment to be due at the end of an earlier specified term.  The principal and interest on the loan are amortized over a longer period than the actual term of the mortgage.

Balloon Payment:

The final lump sum payment that is made at the maturity date of a balloon mortgage.

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.

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.  A bankruptcy can severely impact your credit rating and your ability to borrow money.

Before-Tax Income:

Income before taxes are deducted.  This is also known as “gross income.”

Beneficiary:

The person designated to receive the income from a trust, estate or a deed of trust.

Bequeath:

To transfer personal property through a will.

Betterment:

An improvement that increases property value as distinguished from repairs or replacements that simply maintain value.

Bill of Sale:

A written document that transfers title to personal property.

Binder:

A preliminary agreement, secured by the payment of an earnest money deposit, under which a buyer offers to purchase real estate.

Bi-Weekly 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) bi-weekly 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 Mortgage:

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

Board of REALTORS®:

An association of REALTORS® in a specific geographic area.

Bona Fide:

In good faith; without fraud.

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.

Breach:

A violation of any legal obligation.

Bridge Loan:

A short-term loan secured by the borrower’s current home (which is usually for sale) that allows the proceeds to be used for building or closing on a new house before the current home is sold.  This is also known as a “swing loan.”

Broker:

A person who, for a commission or a fee, brings parties together and assists in negotiating contracts between them, such as a mortgage broker or real estate broker.

Broker’s Price Opinion (BPO):

The real estate broker’s opinion of the expected final net sale price, determined prior to the acquisition of the property.

Brokers’ Tour:

A pre-set time and day when real estate agents can view listings by multiple brokerages in the same market.

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.

Budget Category:

A category of income or expense data that you can use in a budget.  You can also define your own budget categories and add them to some or all of the budgets you create.  “Rent” is an example of an expense category. “Salary” is a typical income category.

Building Code:

Local regulations that set forth the standards and requirements for the construction, maintenance and occupancy of buildings.  The codes are designed to provide for the safety, health and welfare of the public.

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’s Agent:

The real estate licensee who shows the buyer’s property, negotiates the contract or offer for the buyer and works with the buyer to close the transaction.

Buyers’ Market:

The condition which exists when a buyer is in a more commanding position as to price and terms because real property offered for sale is in plentiful supply in relation to demand.