Debt Consolidation Glossary of Terms

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Glossary - B

balance sheet
A report of financial condition, including assets, liabilities and net worth.

balloon mortgage
A mortgage loan that has regular monthly payments which amortize over a stated loan term but call for a final lump sum (balloon payment) at the end of a specified period of time, or maturity date, such as 10 years.

balloon payment
A payment on a balloon morgage, that is larger than the other periodic payments, and pays off the remaining principal.

bankruptcy
A legal proceeding that protects a debtor from legal action by some creditors. A Chapter 7 bankruptcy declaration gets rid of all debts (except some taxes and maybe alimony payments). Chapter 13 allows a borrower with a steady income to pay off bills over a specified period of time.

basis point
One-hundredth of a percentage. The difference between 8.04 percent and 8.05 percent is one basis point.

beneficiary
One who benefits from an insurance policy, will or deed or trust.

binder
A temporary insurance contract that provides proof of coverage until a permanent policy is issued.

biweekly mortgage
A mortgage loan that schedules payments every two weeks instead of once a month. The 26 biweekly payments are each equal to half of the monthly payment. The borrower gets a substantial reduction in interest payments because the mortgage is paid off sooner.

bridge loan
A loan that "bridges" the gap between the purchase of a new home and the sale of the borrower's current home. The borrower's current home is used as collateral and the money is used to close on the new home before the current home is sold. Some are structured so they completely pay off the old home's first mortgage at the bridge loan's closing, while others pile the new debt on top of the old. They usually run for a term of six months.

broker
A person who earns a commission or fee for bringing together buyers and sellers of real estate, or borrowers and lenders of mortgages.

buydown mortgage
The process of trading money for a lower mortgage rate. The borrower "buys down" the interest rate on a mortgage by paying discount points up front.