Balance Sheet
A financial statement that shows assets, liabilities, and net worth as of a specific date.
Balloon Mortgage
A mortgage in which the borrower’s monthly payments are amortized over a longer period than the actual term of the mortgage. As a result, at the end of the loan term, the borrower must pay off the remaining balance with a single lump sum payment or refinance the loan.
Balloon Payment
The final lump sum payment that is made at the maturity date of a balloon mortgage.
Bankruptcy
A legal proceeding that allows debtors to eliminate or restructure debts when they have financial difficulties.
Before-Tax Income
Income before taxes are deducted. Also known as “gross income.”
Biweekly Payment Mortgage
A mortgage with payments due every two weeks (instead of monthly).
Bona fide
In good faith, without fraud.
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. Also known as a “swing loan.”
Broker
An individual or firm that acts as an agent between providers and users of products or services, such as a mortgage broker or real estate broker.
• See also “Mortgage Broker”
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
An arrangement whereby the property developer or another third party provides an interest subsidy to reduce the borrower’s monthly payments typically in the early years of the loan.
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.