Balloon
mortgage
A
mortgage loan that requires the remaining principal balance
be paid at a specific point in time. For example, a loan
may be amortized as if it would be paid over a thirty
year period, but requires that at the end of the tenth
year the entire remaining balance must be paid.
Balloon
payment
The
final lump sum payment that is due at the termination
of a balloon mortgage.
Bankruptcy
By
filing in federal bankruptcy court, an individual or individuals
can restructure or relieve themselves of debts and liabilities.
Bankruptcies are of various types, but the most common
for an individual seem to be a "Chapter 7 No Asset"
bankruptcy which relieves the borrower of most types of
debts. A borrower cannot usually qualify for an "A"
paper loan for a period of two years after the bankruptcy
has been discharged and requires the re-establishment
of an ability to repay debt.
Bill
of sale
A
written document that transfers title to personal property.
For example, when selling an automobile to acquire funds
which will be used as a source of down payment or for
closing costs, the lender will usually require the bill
of sale (in addition to other items) to help document
this source of funds.
Biweekly
mortgage
A
mortgage in which you make payments every two weeks instead
of once a month. The basic result is that instead of making
twelve monthly payments during the year, you make thirteen.
The extra payment reduces the principal, substantially
reducing the time it takes to pay off a thirty year mortgage.
Note: there are independent companies that encourage you
to set up bi-weekly payment schedules with them on your
thirty year mortgage. They charge a set-up fee and a transfer
fee for every payment. Your funds are deposited into a
trust account from which your monthly payment is then
made, and the excess funds then remain in the trust account
until enough has accrued to make the additional payment
which will then be paid to reduce your principle. You
could save money by doing the same thing yourself, plus
you have to have faith that once you transfer money to
them that they will actually transfer your funds to your
lender.
Bond
market
Usually
refers to the daily buying and selling of thirty year
treasury bonds. Lenders follow this market intensely because
as the yields of bonds go up and down, fixed rate mortgages
do approximately the same thing. The same factors that
affect the Treasury Bond market also affect mortgage rates
at the same time. That is why rates change daily, and
in a volatile market can and do change during the day
as well.
Bridge
loan
Not
used much anymore, bridge loans are obtained by those
who have not yet sold their previous property, but must
close on a purchase property. The bridge loan becomes
the source of their funds for the down payment. One reason
for their fall from favor is that there are more and more
second mortgage lenders now that will lend at a high loan
to value. In addition, sellers often prefer to accept
offers from buyers who have already sold their property.
Broker
Broker
has several meanings in different situations. Most Realtors
are "agents" who work under a "broker."
Some agents are brokers as well, either working form themselves
or under another broker. In the mortgage industry, broker
usually refers to a company or individual that does not
lend the money for the loans themselves, but broker loans
to larger lenders or investors. (See the Home Loan Library
that discusses the different types of lenders). As a normal
definition, a broker is anyone who acts as an agent, bringing
two parties together for any type of transaction and earns
a fee for doing so.
Buydown
Usually
refers to a fixed rate mortgage where the interest rate
is "bought down" for a temporary period, usually
one to three years. After that time and for the remainder
of the term, the borrower’s payment is calculated
at the note rate. In order to buy down the initial rate
for the temporary payment, a lump sum is paid and held
in an account used to supplement the borrower’s monthly
payment. These funds usually come from the seller (or
some other source) as a financial incentive to induce
someone to buy their property. A "lender funded buydown"
is when the lender pays the initial lump sum. They can
accomplish this because the note rate on the loan (after
the buydown adjustments) will be higher than the current
market rate. One reason for doing this is because the
borrower may get to "qualify" at the start rate
and can qualify for a higher loan amount. Another reason
is that a borrower may expect his earnings to go up substantially
in the near future, but wants a lower payment right now.
