Balloon (Payment) Mortgage - Usually a short-term fixed-rate loan which involves small payments for a certain period of time and one large payment for the remaining amount of the principal at a specific time.

Bank Draft - A payment method where your loan payment is automatically deducted from your checking or savings account, so you don't have to mail in your payment each month.

Bankruptcy - A payment method where your loan payment is automatically deducted from your checking or savings account, so you don't have to mail in your payment each month.

Beneficiary - A person, persons, or organization designated to receive the benefits from a life insurance policy, trust, estate, or pension upon the death of the insured, testator, or pensioner.

Bi-Weekly 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.

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.

Billing Error - Any mistake in your monthly statement as defined by the Fair Credit Billing Act.

Binder or 'Offer to Purchase' - A preliminary agreement, secured by the payment of earnest money, between a buyer and seller as an offer to purchase real estate. A binder secures the right to purchase real estate upon agreed terms for a limited period of time. If the buyer changes his mind or is unable to purchase, the earnest money is forfeited unless the binder expressly provides that it is to be refunded.

Borrower - One who receives funds in the form of a loan with the obligation of repaying the loan in full with interest

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 - An individual in the business of assisting in arranging funding or negotiating contracts for a client but who does not loan the money himself.

Building Line or Setback - Distances from the ends and/or sides of the lot beyond which construction may not extend. The building line may be set by a filed plat of subdivision, by restrictive covenants in deeds or leases, by building codes, or by zoning ordinances.

Business Days - Always contact your institution to find out what days it counts as business days under the Truth in Lending and Electronic Fund Transfer Acts.

Buydown - When the lender and/or the home builder subsidizes the mortgage by lowering the interest rate during the first few years of the loan. While the payments are initially low, they will increase when the subsidy expires.