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

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

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

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

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

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

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

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