Glossary

Automated Underwriting: An auto-

parties agree in advance to agree with

the decision of the arbitrator. There is

mated process performed by a technol-

a hearing where both parties have an

ogy application that streamlines the

opportunity to be heard, after which the

processing of loan applications and

arbitrator makes a decision.

provides a recommendation to the lender

to approve the loan or refer it for manual

Asbestos: A toxic material that was

underwriting.

once used in housing insulation and

fireproofing. Because some forms of as-

B

bestos have been linked to certain lung

diseases, it is no longer used in new

homes. However, some older homes may

Balance Sheet: A financial statement

still have asbestos in these materials.

that shows assets, liabilities, and net

worth as of a specific date.

Assessed Value: Typically the value

placed on property for the purpose of

Balloon Mortgage: A mortgage with

taxation.

monthly payments often based on a

30-year amortization schedule, with

Assessor: A public official who estab-

the unpaid balance due in a lump sum

lishes the value of a property for taxa-

payment at the end of a specific period

tion purposes.

of time (usually 5 or 7 years). The mort-

gage may contain an option to "reset"

Asset: Anything of monetary value that

the interest rate to the current market

is owned by a person or company. As-

rate and to extend the due date if certain

sets include real property, personal

conditions are met.

property, stocks, mutual funds, etc.

Balloon Payment: A final lump sum

Assignment of Mortgage: A document

payment that is due, often at the matu-

evidencing the transfer of ownership of a

rity date of a balloon mortgage.

mortgage from one person to another.

Bankruptcy: Legally declared unable to

Assumable Mortgage: A mortgage loan

pay your debts. Bankruptcy can severely

that can be taken over (assumed) by the

impact your credit and your ability to

buyer when a home is sold. An assump-

borrow money.

tion of a mortgage is a transaction in

which the buyer of real property takes

Before-tax Income: Income before taxes

over the seller's existing mortgage; the

are deducted. Also known as "gross in-

seller remains liable unless released by

come."

the lender from the obligation. If the

mortgage contains a due-on-sale clause,

Biweekly Payment Mortgage: A mort-

the loan may not be assumed without

gage with payments due every two weeks

the lender's consent.

(instead of monthly).

Assumption: A homebuyer's agreement

Bona fide: In good faith, without fraud.

to take on the primary responsibility

for paying an existing mortgage from a

Bridge Loan: A short-term loan secured

home seller.

by the borrower's current home (which

is usually for sale) that allows the pro-

Assumption Fee: A fee a lender charges

ceeds to be used for building or closing

a buyer who will assume the seller's ex-

on a new house before the current home

isting mortgage.

is sold. Also known as a "swing loan."