Page 1
Back-End Ratio - Business License

Page 2
Buy-Down Mortgage - Bylaws

Back-End Ratio
Back Title Letter
Backup Offer
Balance Sheet
Balloon Loan
Balloon Payment
Bank Wire
Bankruptcy
Basis Point
Bearing Wall
Before-Tax Income
Beneficiary
Betterment
Bidding War
Bilateral Contract
Bill of Sale
Binder
Biweekly Mortgage
Blanket Mortgage
Book Value
Breach of Contract
Break-Even Point
Bridge Loan
Broker
Broker Premium
Brokerage
Building Code
Business License

Back-End Ratio
(aka back ratio, debt-to-income ratio, DTI) The calculation of the borrower's gross monthly income divided by all of the borrower's monthly expenses including mortgage, loans, credit cards, etc. Previously lenders were infamous for not approving any loans with a "back-end ratio" of over 35% but in recent years lenders have expanded their guidelines to allow borrowers "back-end ratios" as high as 55%, especially in California. For example: An individual makes a gross income of $40,000. He has $400 in monthly expenses including student loan payments and credit card payments. To find the DTI ratio, we divide the annual income by 12 (for 12 months) to calculate monthly gross income, which is $3,333. We then divide the monthly expenses of $400 with the monthly income resulting in a back-end ratio of 12%.

Back Title Letter
A letter composed by the title insurance company to an attorney describing the property's current title or ownership situation.

Backup Offer
An offer that a seller considers in the case the current accepted offer falls through for any reason.

Balance Sheet
A report assembled with all financial information of an individual includeing all asset and liabilities.

Balloon Loan
A type of loan where instead of full repayment of the loan at the end of the term, the entire loan amount must be repaid at an earlier indicated time. For example: A 30 year loan with a balloon payment due in 15 years means that at the end of 15 years the entire loan amount must be repaid in full rather than at the end of the full 30 years.

Balloon Payment
The final loan installment or payment to pay off a loan. This one payment is generally larger than any of the previous periodic payments.

Bank Wire
(aka wire transfer) An electronic method of transferring funds.

Bankruptcy
A legal process that once completed protects the debtor from creditors. There are three main different types of bankruptices : 1) Chapter 7, 2) Chapter 13, and 3) Chapter 11.

Basis Point
1/100th of a percentage point. For example: 1 basis point = the difference between 1.00 and 1.01.

Bearing Wall
A structure supporting a roof or another part of a building. This specific structure is absolutely necessary to keep the building standing.

Before-Tax Income
(aka gross income) The amount of income before taxes and other deductions have been taken.

Beneficiary
The one who benefits, whether it is from a will, deed, or trust.

Betterment
An improvement, addition, or replacement that increases the value of a property.

Bidding War
Multiple, completing offers for a property. If this occurs demand is generally higher than supply in the housing market, creating these situations where the ultimate sales price is driven up.

Bilateral Contract
A legal agreement of contract where both parties agree to give each other something or service in return for something else or service. Real estate contracts are considered bilateral in that the seller is agreeing is transfer the deed or ownership of his property and the buyer is agreeing to transfer a certain amount of money in return.

Bill of Sale
A document that shows the transfer of a property.

Binder
An initial agreement between two parties secured or guaranteed by an earnest deposit where the buyer offers to purchase a property.

Biweekly Mortgage
A mortgage with payments scheduled twice a month rather than once a month. Each payment is half of the monthly payment resulting in a mortgage that is ultimately paid off sooner.

Blanket Mortgage
A loan secured by more than one property.

Book Value
The value of a property based on its cost plus any additions and/or improvements, without considering depreciation.

Breach of Contract
Any failure to abide by previously agreed upon conditions and guidelines according to the signed contract.

Break-Even Point
The point at which calculations show that income and expenses equal each other.

Bridge Loan
A loan bridging the gap between the purchase of a property and the sale of a current property. This type of loan is created to be short term so it usually has a life term of 6 to 12 months maximum.

Broker
In the mortgage industry this refers to a person who represents the client and aids the client through the process of shopping and obtaining a loan.

Broker Premium
A mortgage broker is considered a middleman between lender and borrower. Lenders offer brokers wholesale rates on top of which the broker may decide to add a surcharge on the interest rate for compensation purposes.

Brokerage
A company who earns commissions or fees for bringing together and facilitating the process for borrowers to obtain loans.

Building Code
Regulations and ordinances that provide guidelines as to how much materials are to be used and how structures should be constructed.

Business License
A license is given by a city to a business. It gives authorization to operate as a business undisturbed. Lenders often ask for this document to prove a borrower's self-employment status.