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Glossary

Balloon Mortgage

A short-term loan that is paid off through fixed monthly payments, followed by one large, final payment (the 'balloon') of the entire remaining loan balance. The balloon mortgage is amortized as though it were a long-term fixed rate loan, resulting in low monthly payments, but after a specified time period (usually five, seven or 10 years) the entire remaining balance is due and payable in full.

Balloon Payment

The final lump sum payment made at the maturity date of a balloon mortgage. When payment is due, the homeowner may be able to refinance the loan.

Bankruptcy

A legal process in which a person who is unable to pay outstanding debts is released from payment of all debts owed. In many cases, the court distributes the debtor's property to the creditors as payment for the outstanding debt.

Blanket Mortgage

One mortgage that covers more than one property.

Bridge Loan

A mortgage loan that enables you to obtain financing for a new house before your current house is sold. The current house is used as collateral. Also called a swing loan.

Buyer

The person who applies for a mortgage loan and will be responsible for repaying it. There may be more than one buyer on a single loan.

Buyer's Title Insurance

Insurance that protects you from losses that may result from disputes over the property's title. Typically, you purchase two separate policies: The Lender Title Insurance, which is a part of your closing costs, and separate insurance to protect your interests.