Real Estate & Investing Dictionary
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Bachelor Apartment
A small rental dwelling unit which combines living and bedroom spaces into one room. Also referred to as a "efficiency suite" or as a "studio apartment".

Back Taxes
Taxes owed from a prior year(s).

Back-end Fees
Commission received by a syndicator when real estate is sold and are typically paid after the investors receive their initial investment plus return.

Back-end Ratio
Lender calculations by which debt (principal, interest, property taxes and insurance + other monthly bills) is compared with gross monthly income.

Balance Owed on the Loan
The part of the original loan that remains unpaid by the borrower at a given point in time.

Balance Sheet
A financial statement showing assets, liabilities, and net worth.

Balance Sheet
Statement of financial condition, which lists assets, liabilities and stockholder's equity. The net worth of an individual is assets minus liabilities.

Balloon Loan
A mortgage in which the monthly payment is not intended to repay the entire loan. The final payment is a large lump sum of the remaining principal.

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 Note Mortgage
A loan that is only partial amortized and requiring a lump sum repayment at maturity.

Balloon Payment
The final lump sum payment of a balloon loan.

Balloon Payment
A final installment payment, larger than previous installments that pays off a debt.

An action filed in a federal bankruptcy court that allows a creditor to reorganize or discharge credit obligations due to insolvency. A property owner may restrain foreclosure action by filing 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.

A legal procedure by which an insolvent debtor can be relieved of repayment of certain obligations. Bankruptcies remain on a credit rating for 7 to 10 years. This may become a problem in obtaining financing.

Bargain & Sale Deed
One of many types of deeds used to transfer real property. Contains implied warranties against prior conveyances or encumbrances.

Bargain and Sales Deed
The most widely used type of real estate deed, this makes the transfer of property from one individual to another for a consideration in the form of a sale.

Base Line
Latitudinal starting line from which townships are measured to the North and South.

Lender in whose hands the promissory note remains until it is paid in full.

Bearing Wall
Wall that supports its weight and the weight of other parts of the structure and are necessary for the stability of a structure. Bearing walls often include one or more interior walls, as well as the exterior walls. Openings cut into bearing walls must be reinforced and a different load path used through the use of headers carry the loads across the top of the opening.

Soil with solid rock underneath which provides an excellent foundation on which to construct a building.

Before-tax Income
Total income prior to deduction of taxes.

A summer house on a height or an upper-story open-roofed gallery designed to give a view of the scenery.

The lender, who is making a loan, is called either a mortgagee or a beneficiary. The borrower is the mortgagor

(1) One entitled to the benefit of a trust: (2) One who receives profit from an estate, the title of which is vested in a trustee: (3) The lender on a security of a note and deed of trust.

Beneficiary Statement
Lien holder's statement showing the unpaid balance on a trust deed note.

Beneficiarys Statement
("Benny Statement") A written statement of the conditions and remaining balance of a loan secured by a deed of trust.

Beveled Siding
Also known as clapboard, this siding, which is angled, consists of long beveled boards.

Bid Price
Price a purchaser is willing to pay for a certain item.

Bid Time
Time between asking for a bid and when it is due to be received.

Bidding War
Multiple offers to purchase a piece of property or a house or competition between realtors for the listing of a piece of property or house.

Bilateral Contract
A reciprocal contract in which the parties involved give mutual promises.

Bilateral Listing
Agreement between broker and seller agreeing on mutual performance, the broker to advertise at the agreed upon terms and the seller to sell the listed property. It may also mean listing two separate realtors.

Bill of Complaint
The initial paperwork filed in many states to begin a foreclosure. It is part of the process of filing a lawsuit.

Bill of Material
Listing of parts of an item as shown in a drawing.

Bill of Sale
A document transferring ownership.

Bill of Sale
A document by which title to personal property is passed from seller to buyer.

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.

Small deposit money paid with a temporary agreement to purchase property under specified terms.

Bird Dog
People whom are on the lookout for properties that are for sale.

Bird Dogging
Is finding deals and passing them on to other investors for a finder’s fee.

Is finding deals and passing them on to other investors for a finder’s fee.

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

Biweekly Mortgage
Mortgage that is paid every two weeks, rather than monthly, thus repaying the loan more quickly

Black Iron
Iron without any finish on it, which is really gray-black in color.

Blanket Insurance Policy
Insurance policy covering multiple persons or pieces of property.

Blanket Mortgage
A mortgage covering more than one property owned by the same owner

Blanket Mortgage
One mortgage that covers several different parcels of real property.

Blended Interest Rate
The interest rate resulting from half the difference of the interest rate originally written for the mortgage and the current market rate of interest.

Blended Loan
Mortgage refinancing in which the new interest rate takes into account the interest rate on the prior loan and the prevailing current market rate.

Blended Rate
Interest rate of a blended loan, which exceeds the rate on the old loan but is less than the rate on new loans.

An area of land within a Section that has been surveyed and platted, most often containing Lots.

Construction plans, containing great detail about the particular building. Usually these plans are drafted on blue paper thus the name.

Board of Realtors
Local group of real estate brokers who are members of the State and National Board of Realtors. They meet regularly to help determine licensing requirements as well as managing the multiple listing service of their area.

Board of Trustees
An appointed or elected body overseeing the management of an organization and rendering advice on issues and are legally responsible for their decisions.

Boiler Plate
Preprinted sections of a contract.

A set sum of money or assets that are available if needed to pay to a court or other named person upon a certain event.

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.

Book and Page
The location of a recorded document in an office of records referenced by separate book number and page number within that book, listed chronologically and alphanumerically.

Book Value
The value of a property carried on a company's books. It is usually the cost less depreciation or cost recovery plus capital additions.

Boundaries that are natural or artificial, i.e.-roads, trees, rocks, railroad tracks, etc.

Breach of Warranty
Inability, on the part of the seller, to pass along clear title to a buyer.

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 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.

A person who acts as a conduit between two parties. A real estate broker is licensed to handle property transactions. A mortgage broker matches, for a specific fee, borrowers to lenders and loan programs.

Broker Price Opinion
A real estate broker's estimate of the price for which property can reasonably be sold. The broker price opinion is often much cheaper than a professional appraisal, but often just as good, or even more useful because it tells the owner at what price the property can successfully be marketed.

Broker's Agreement
Contract to act on behalf of a principal in selling real estate, wherein the principal agrees to pay a commission to the broker when a buyer is produced who is ready, willing and able to meet the terms of the sale.

The bringing together of two parties in exchange for a fee or commission. Also, a company or firm employing agents acting as brokers.

An arrangement in which the seller of real estate pay some or all of the buyer's loan costs, usually measured by increments of 1 percent of the loan called points. The seller pays enough points to the lender to permit it to offer the buyer's loan at a reduced interest rate, which reduces the monthly payment. The cost to the seller is small, but the reduction in payments to the buyer is often quite substantial. Buydown arrangements are often structured to focus the entire reduction in interest rate, and therefore monthly payments, in the early years of the loan. In a 3-2-1 buydown, a seller will pay enough points to reduce the buyer's interest rate by 3 percent, such as from 10 percent to 7 percent, the first year, then by 2 percent the second year and by 1 percent the third year. In the fourth year the loan interest rate and the monthly payments would return to the normal market rate of interest as set when the loan was first obtained.

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.
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