Mortgage Glossary
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BACK END RATIO:
A comparison of a borrower's monthly expenses to her gross monthly income used to assess her ability to carry a mortgage or other loan.
BALLOON (LOAN) MORTGAGE:
A loan which is repaid by a series of small, periodic payments until a given date, when either the balance comes due in a single, large payment or the amount of the payments rises significantly.
BALLOON PAYMENT:
The single, large payment which pays out the balance due on a balloon mortgage.
BIWEEKLY LOAN OR MORTGAGE:
A loan which features payments equaling one half of the usual monthly payment made every two weeks (to total 26 in a year), thus substantially reducing the life of the mortgage and the interest payable over the life of the mortgage.
BLANKET MORTGAGE:
Where one loan is secured against more than one parcel of land.
BLENDED RATE:
Created when an old loan is refinanced and extended at an interest rate which is different from the original rate: the old debt is still payable at the old rate; the new debt is payable at the new rate; the total amount of the debt is payable at a rate of interest that is somewhere between the two rates.
BRIDGE FINANCING:
Also known as a "swing loan", a loan used to fill a gap in financing, often between the purchase of a new home and the sale of the old one. If the purchase closes before the sale, the home owner needs to borrow enough money to pay for the new house for the period of time before the equity in his old house comes available as a result of the completion of the sale.
BUDGET MORTGAGE:
A mortgage in which the borrower is required to make periodic payments not only for interest and principal, but also for insurance premiums and realty tax installments.
BUY DOWN (ACCOUNT OR MORTGAGE):
The payment of extra money on a loan now so as to reduce the interest rate over a given period or over the life of the loan. This extra payment may be made by the borrower, by the lender (as an incentive to the borrower to borrow from the lender) or by the vendor/builder (as an incentive to the borrower to buy a certain property).
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This glossary is a compilation of terms commonly used in the real estate, mortgage and construction industries. This publication has been created to provide general overview information with regard to these industries, and while generic, this information may not be applicable to all juristictions. It is provided with the understanding that the publisher is not engaged in the rendering of legal, mortgage or any other professional advice or services. If legal advice or other expert assistance is required or needed, the services of the appropriate professional should be sought and you should not rely on the information found herein. | |