Balloon
loan A loan with periodic installments of principal
and interest that do not fully amortize the loan. The balance
of the loan is due in a lump sum at a specified date, usually
at the end of the term.
Balloon
payment Where the final installment payment on a
note is greater than the preceding installment payments and
it pays the note in full.
Bankruptcy
The financial inability to pay one's debts when due.
The debtor seeks relief through court action that may work
out or erase debts. Bankruptcy may be declared under one of
several chapters of the bankruptcy code:
Chapter 7
— Debt liquidation of bankrupt individuals and businesses
Chapter 11
— Debt reorganization of bankrupt businesses
Chapter 13
— Reorganization of debts by individuals (wage-earner's
plan).
Basis points
(bps) 100th of 1%. (Example: Rates are 12.75% this
week and were 12.25% last week — an increase of 50 basis
points.)
Binder
insurance A written evidence of temporary hazard
or title coverage that only runs for a limited time and must
be replaced by a permanent policy.
Bona fide
In good faith, without fraud.
Borrower
One who receives funds, in the form of a loan, with the expressed
or implied intention of repaying the loan in full.
Breach
Violation of a legal obligation.
Broker
A person who, for a commission or a fee, brings parties together
and assists in negotiating contracts between them.
Bump
An interest rate increase, usually between 0.25% and 1.00%,
due to adverse factors on a loan, i.e., bankruptcy or high
loan-to-value.
Buy rate
The rate after all adjustments have been added or subtracted
from the note rate.
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