| Real Estate Terminology, Wording |
Gladwin Real Estate Information
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
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.
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
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.
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
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
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.
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
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.
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