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Mortgage Loan Glossary

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Bait and Switch
Sales tactic used to lure the borrower by presenting them with an interest rate up front, then raising the interest rate at the time of the loan signing.
MORTGAGE LOAN EXAMPLES: Bait and Switch
Balance
Amount of the mortgage loan due equal to the total loan amount minus all payments that have been made.
SIMILAR MORTGAGE TERMS: Principal Balance
Balloon
In terms of a mortgage loan, it refers to either a particular type of loan program or loan payment.
Balloon Mortgage
Also known as a balloon loan, this mortgage loan program offers the buyer a chance to pay the entire loan amount over a shorter term such as 10 or 15 years as opposed to the standard 30 years, while still being able to make monthly payments that would be equal to that over a 30 year loan term. This is accomplished by making one final large lump sum payment at the end of the ballooned mortgage loan term. This type of mortgage loan program has lost popularity over the years, as most borrowers end up refinancing their home prior to the due date of the final balloon payment.
RELATED MORTGAGE TERMS: Balloon Payment
MORTGAGE LOAN EXAMPLES: Balloon Mortgage Loan
Balloon Payment
Final lump sum payment of the principal balance that is due at the end of a ballooned mortgage loan term. The amount that is due is usually around half of the amount of the original mortgage loan.
RELATED MORTGAGE TERMS: Balloon Mortgage
Band Aid Loan
Phrase used in the mortgage loan industry to describe a loan program that aids, or will work to aid a prospective borrower to be in a better financial situation in the future.
MORTGAGE LOAN EXAMPLES: Band Aid Loan
Bankruptcy
Legal proceeding that protects a person in debt from further legal consequences by some creditors. The assets of the person filing bankruptcy are usually turned over to a trustee who then uses them to pay for outstanding debts. Chapter 7 and Chapter 13 are the two most common types of bankruptcies that individuals file for.
RELATED MORTGAGE TERMS: Chapter 7|Chapter 13
Base Income
Salary of an employed individual, or the income minus expenses of a self-employed individual.
MORTGAGE LOAN EXAMPLES: Base Income
Benefit
In terms of a mortgage loan, a benefit can be from one to many facets of that loan that aid the borrower to accomplish one or more goals.
RELATED MORTGAGE TERMS: Band Aid Loan
Bimonthly Mortgage
Mortgage Loan Program that has a payment schedule where payments are normally due on the 1st and 15th of every month. This type of loan program differs from a biweekly mortgage in that 24 payments are made per year rather than 26. A benefit from both bimonthly mortgages and biweekly mortgages is that there is a considerable reduction in interest payments due to the mortgage being paid off sooner.
RELATED MORTGAGE TERMS: Biweekly Mortgage
MORTGAGE LOAN EXAMPLES: Bimonthly and Biweekly Mortgages
Biweekly Mortgage
Mortgage Loan Program that has a payment schedule where payments are due every two weeks. This type of loan program differs from a bimonthly mortgage in that 26 payments are made per year rather than 24. A benefit from both bimonthly mortgages and biweekly mortgages is that there is a considerable reduction in interest payments due to the mortgage being paid off sooner.
RELATED MORTGAGE TERMS: Bimonthly Mortgage
MORTGAGE LOAN EXAMPLES: Bimonthly and Biweekly Mortgages
Blanket Mortgage
Mortgage loan program that is secured by more than one property and usually refers to commercial real estate.
Borrower
In terms of a mortgage loan, it is an individual who is or will be legally binded to repay a real estate loan that they have been approved for.
RELATED MORTGAGE TERMS: Co-borrower
Borrowers Authorization
A mortgage loan disclosure that authorizes the assigned loan officer to carry out services such as requesting pay off demands from a borrower's creditors.
RELATED MORTGAGE TERMS: Disclosures|Payoff Demand
MORTGAGE LOAN EXAMPLES: Borrowers Authorization
Bridge Loan
Short term mortgage loan that is acquired to purchase a new home before selling an existing home. The existing home is typically used as collateral for this type of home loan.
Broker
See Mortgage Broker
RELATED MORTGAGE TERMS: Loan Officer (LO)
Broker Premium
An amount paid through a real estate loan to a mortgage loan broker for their services. Such services include finding a loan for the prospective borrower, organizing all documents needed to attain a loan approval, keeping the prospective borrower informed about the status of the loan, and many other duties that may be crucial to the loan approval process. A good mortgage broker will analyze a variety of loan programs from a variety of lenders to find one that best suits their borrower's needs and accomplishes their goals.
RELATED MORTGAGE TERMS: Good Faith Estimate (GFE)|Loan Officer (LO)|Mortgage Broker
Budget
In terms of a mortgage loan, it is the amount of money a borrower needs each month to adequately pay for their monthly mortgage payment, pay all other monthly financial obligations, and pay for expenses that are necessary to the individual's survival.
Builder
In terms of a mortgage loan, it is the individual, business, or agency responsible for a house or building's construction.
Building Code
An area specific set of regulations for governing the design and materials used in construction.
Buydown
See Rate Buydown
Buyup
See Rate Buyup

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