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Glossary B
Balloon Loan
Also called a Balloon Mortgage. A short-term loan with a fixed rate with level payments but does not fully amortize the loan over the original term. A loan might be amortized over 30 years, but all due and payable in 10. This gives the buyer the advantage of a lower payment spread out over 30 years. The lender has an advantage in that they receive payment of the full balance in only 10 years. This used to be used primarily in owner-carried loans, but is not prevalent in the mortgage industry as well.
Balloon Payment
The large payment due at the end of a Balloon Loan.
Bankruptcy
A legal declaration by the Federal government stating that the person is unable to pay their debts.
Bankruptcy Discharge
At the end of the bankruptcy proceedings, the court discharges all debts. A Discharge is filed with the court showing the dates all debts were forgiven.
Bi-Weekly Mortgage
A payment plan with payments due every two weeks. The payment is 1/2 or more of the total monthly payment, including taxes and insurance. This constitutes 26 1/2 payments, or 13 full payments, thus paying down the mortgage faster.
Bond Program
A government program that assists certain buyers in purchasing homes.
Borrower
The person applying for and receiving a loan.
Broker
A licensed individual who assists a borrower in obtaining a mortgage from a third party.
Buy Down
A method of subsidizing the loan by the builder, lender or seller which results in a lower payment for the borrower for a certain length of time.
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Letter A