Realty and Mortgage Terms and Definitions
Backfill - The replacement of excavated dirt into a hole, crevice or against a structure such as a foundation.
Backup Contract - A contract to buy property that becomes effective if a prior contract fails to be agreed upon.
Bad Credit - Any late payments that appear on a person's credit report.
Bad Debt - Any revolving loan, mortgage, alimony and child support, or car payments that have never been made.
Balance Sheet - A financial statement in a table form that shows assets, liabilities and net worth.
Balloon Loan - A loan that must be paid off in a shorter period of tiem that it is amortized for.
Balloon Mortgage - A short-term fixed-rate loan which involves smaller payments for a certain period of time and one large payment for the entire balance due at the end of the loan term.
Balloon Payment - The final payment that is made at the maturity date of a balloon mortgage and pays the loan in full.
Bankrupt - A person, company, or corporation that, through formal court proceeding, is relieved from the payment of all debt after the surrender of some or all assets to a court-appointed trustee.
Bankruptcy - A court proceeding in which a debtor, who owes more than his assets, can relieve the debts by transferring his assets to a trustee.
Before Tax Income - Income before deducting taxes.
Beige Book - A survey of economic conditions, conducted in the Federal Reserve’s 12 regional banks, in preparation for Federal Open Market Committee meetings. Frequency: twice per quarter. Source: Federal Reserve.
Beneficiary - The person designated to receive the benefits resulting from certain acts.
Bequeath - To transfer personal property through a will or last testament. Compare with devise.
Betterment - An improvement that increases property value as opposed to repairs or replacements that simply maintain value.
Bi-weekly Payment Mortgage - A mortgage that requires payment to reduce the debt every two weeks instead of monthly. The 26 (sometimes 27) biweekly payments are each equal to one-half of the monthly payment that would be required with a standard 30 year fixed-rate mortgage. The result is a faster loan balance reduction with substantial savings in interest.
Bill of Sale - A written instrument that transfers title to personal property.
Billing Error - Any mistake in your monthly statement as defined by the Fair Credit Billing Act.
Binder - An agreement between a buyer and seller to purchase real estate. A binder, also known as an offer to purchase or a sales contract, 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 that was paid is forfeited unless the binder expressly provides that it is to be refunded.
Binder Deposit - A sum of cash paid to a seller by a buyer prior to the closing to show that the buyer is serious about buying the house. The binder deposit is deducted from the purchase price at closing and is not an additional cost. Sometimes referred to as earnest money.
Blanket Insurance Policy - A single policy that covers more than one piece of property (or more than on person).
Blanket Mortgage - A single mortgage that is secured by more than one parcel of real estate.
Bona fide - In good faith without fraud.
Bond - An interest-bearing certificate that serves as evidence of a debt with a maturity date. Typically, bonds represent obligations of a government or business corporation. A real estate bond is a written obligation, usually secured by a mortgage or deed of trust.
Breach of Contract - A violation of the terms of any legal obligation or agreement.
Bridge Loan - Sometimes called a "swing loan", a bridge loan is generally a loan that is secured by a borrower's current residence to obtain the funds needed to purchase a new home if the current residence will not be sold prior to the purchase of a new home.
Broker - A state-licensed agent who, for a commission or a fee, represents property owners in real estate transactions.
Budget - A detailed plan of income and expenses estimated over a specified period of time. Budgets provide guidelines for managing costs and profits.
Budget Category - A category of income or expense data that you can use in a budget.
Building Code - Regulations established by local governments that control design, construction and materials used in construction. Building codes are usually based on standardized health and safety guidelines.
Business Days - Check with your lending institution to find out what days it considers as business days under the Truth in Lending and Electronic Fund Transfer Acts. Usually excludes weekends and holidays.
Buy-down Account - An account in which money is held so that it can be applied to the monthly mortgage payments, as each payment comes due, during the period that an interest rate buy-down plan is in effect.
Buydown - A process that allows a borrower to obtain a lower interest rate on a mortgage by paying discount points to a lender. A temporary buydown will reduce the interest rate paid during the first few years of the loan. A permanent buydown reduces the interest rate over the entire life of the loan.
Buyer Brokerage - A written agreement authorizing a real estate agent to work exclusively for a buyer in a real estate transaction. Sometimes called a buyer agency agreement.