Real Estate Glossary

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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.

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.

before-tax income
Income before taxes are deducted.

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.

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 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
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 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."

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

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 control design, construction, and materials used in construction. Building
codes are based on safety and health standards.

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.