Balance sheet
A dated financial statement (in table form) that shows your assets, liabilities and net worth.

Balloon loan
A short-term loan with smaller payments for a certain period of time, and one or more large payments for the remaining principal amount, due at a specified time.

Balloon payment
A lump-sum payment, which is larger than your regular periodic payment, that's paid at the end of your loan repayment period.

Bankruptcy
A proceeding in federal court altering or eliminating an eligible individual's obligations to repay some or all of his or her creditors. A borrower may relieve debts by transferring his or her assets to a trustee. Different chapters or types of bankruptcy exist. If a person files bankruptcy, a record of the filing appears on the borrower's credit report for up to 10 years.

Base rate
The underlying interest rate used as a benchmark, or index, for pricing variable-rate loans such as adjustable-rate mortgages, auto loans or credit cards.

Basis point
An amount equal to 1/100th of a percentage point. For example, a fee calculated as 50 basis points of $200,000 would be 0.50% or $1000.

Bi-weekly
Every other week. Some loans offer a bi-weekly payment option, which requires 26 half payments per year (amounting to one additional full payment each year). This option allows you to pay your loan off more quickly and to build equity faster. Sometimes there are costs associated with choosing this option.

Breach
A violation of any legal obligation or contract.

Broker
A third party who helps arrange funding or negotiates a contract between parties, but does not lend the money himself or herself.

Buydown
A buydown is the prepayment by a lender or homebuilder of a portion of the interest that will become due on your promissory note during the buydown period, thereby reducing your monthly payments. The buydown period may be one, two or three years, during which time your monthly payments will increase annually, in accordance with a predetermined schedule, ending with the monthly payment specified in your note.