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Real Estate Dictionary

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back-end ratio

An analysis, by a lender, of a potential borrower’s ability to carry a mortgage or other loan, conducted by comparing the applicant’s current expenses in relation to his or her gross monthly income. If the applicant wants to spend too great a percentage of his or her income on the mortgage (40 percent or more), the lender will conclude that borrower will probably fail to do so, and will almost certainly refuse to offer a mortgage loan.

back-title letter/certificate

In states in which lawyers are required to examine title for title insurance purposes, this document is given to the attorney by the title insurance company to certify the condition of a title as of a certain date.

back-up contract

A secondary offer (from a potential buyer) for a property on which an offer from another buyer has already been made. This contract will come into effect if the first offer is not accepted or,is withdrawn.

balance

The amount of principal that is still outstanding on a mortgage or other loan at any given time.

balloon mortgage

A mortgage loan that is repaid in fixed, periodic (probably monthly) payments until a given date. On that date, either the balance of the loan becomes due in one large payment or the amount of the payments rises significantly.

balloon payment

The final payment that pays off a balloon mortgage.

base rent

The set rent that is paid by a tenant and to which can be added additional fees as set out in the lease (i.e., for upkeep, utilities, etc.).

bathroom

A room in a house or in an apartment or condominium unit that contains a toilet, a sink, and either a bathtub or a bathtub and shower combination. A room that contains these facilities but has only a shower and no tub is called a three-quarters bath. If the room contains only a toilet and sink, it is called a half bath.

bedroom community

An area that includes mainly housing (residential or rental) and very few businesses. The term usually refers to a commuter town or suburb whose residents work in the central city or a in more economically diverse suburb.

below-market interest rate (BMIR)

A subsidized interest rate on a mortgage or loan. This kind of subsidy is often provided by the government to allow for the acquisition of property by people who earn less than average salaries.