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| Each letter will take you to a list of financial terms and their meaning. |
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| B |
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Buydown
A borrower pays additional points on the loan to decrease the monthly mortgage. There are two types of Buydowns, the Permanent Buydown and the Temporary Buydown. In a Permanent Buydown, the rate is lowered permanently by prepaying a sufficient amount of interest. In a Temporary Buydown, the payment is lowered for the first three years by paying only a sufficient interest. Borrowers choose the second option to reduce the current payments thus more easily qualifying for the loan. This is reasonable because income normally continues to increase as the interest rate does. The name of the most usual type of Temporary Buydown is 3-2-1, which means three percent lower the first year, two percent lower the second year, and one percent lower the third year. |
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Broker
A person in the business of professionally assisting in organizing negotiating contracts or funding for a client (this does not mean that he loans the money himself). They frequently receive a commission or charge a fee for their services. |
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Borrower (Mortgagor)
The person who applies for a mortgage loan and receives it, with the intention of repaying it in full.
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Biweekly Mortgage
This is a type of fixed-rate mortgage with biweekly payments for half the common monthly amount. A person makes the equivalent of 13 months of payments each year. In this type of loan, the loan term is reduced from 30 years to 19 or 18 years. Also, total interest costs are considerably inferior. |
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Balloon Mortgage
This type of fixed rate mortgage loan becomes completely due after usually five or seven years have gone by. After the loan matures, you must either refinance or pay it off in cash (this is called Balloon Payment). One of the advantages of this type of loan is that the initial rate is frequently lower than a regular fixed rate loan. Regarding the disadvantages, you might have to pay off or refinance the loan if you do not sell the property by the time the loan matures. |
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