Back Rent to Bank Statement

 

Back Rent

Any part of the rent payments due for a rental property that is currently unpaid and/or delinquent.

Back Title Letter

A letter, usually issued by a title insurance company to a real estate attorney, instructing that attorney to examine the title for the purpose of defining the limits of the title insurance to be issued. The back title letter typically uses the title company’s previous title search. The letter then instructs the attorney or new title searcher to start their investigation and coverage from the date of the previous title search.

Back-End Ratio

When qualifying the applicant’s income, the back-end ratio is the total debt-to-income (DTI) ratio limit that deals with all long-term liabilities. Unlike the front-end ratio that considers only the housing expense qualification-which is also considered long-term-the back-end ratio includes all other long-term debts, as well as the housing expense. The conforming loan limit for the back-end ratio is usually 33% to 38%, which means that the sum total of all long-term monthly payments (including total housing expenses) should not exceed 33% to 38% of the borrower’s gross income, depending on the specific loan program. Thus, if you add together the monthly payments on all your loans, credit cards and projected housing expenses, then divide by your gross monthly income, you will arrive at your projected back-end ratio. However, certain nonconforming programs allow back-end ratios in excess of 55%.

Backfill

The gravel, soil or other material replaced in the space around a building wall after the foundation and external subterranean walls have been set. It is used to add strength to the foundation. Also called fill dirt.

Back-to-Back Escrow

An escrow arrangement used by some individuals who are selling one property and buying a second property.

Back-Up Contract

A real estate purchase agreement that becomes effective only if a primary contract with another party fails to close. The buyer in the back-up contract understands that he or she may not be able to purchase the property, particularly if the primary buyer is able to complete a purchase.

Back-Up Financing Commitment

Similar to the Back-Up Contract, the back-up financing commitment is a loan approval commitment that is activated if the primary loan commitment is unable to consummate.

Back-Up Loan

A loan or financing commitment that is a stand-by or fall-back option to a more preferable or prior loan commitment. If the primary loan commitment is unable to close, the back-up loan is used to consummate the deal.

Back-Up Offer

In real estate, a back-up offer is a secondary purchase offer that will be accepted and fully processed only after the primary offer that has been accepted fails to close successfully.

Backwater Valve

A sewer pipe valve that prevents sewage from flowing backwards into the house or building. Major storms may trigger minor floods, especially in built-up areas, which could result in sewage flooding back into homes, unless there is a backwater valve.

Bad Debt Allowance

Accounting terminology used in real estate that enters a reduction allowance against the gross income of an investment. The bad debt allowance assumes that certain invoices or payable rent will never be collected.

Bad Faith

An intentional failure to meet an obligation.

Bail Bond Lien

A type of lien that is used to secure bail for a property owner or someone that the real estate owner trusts. An indicted individual can put up real estate in lieu of cash, and the court will record a lien against the person’s real estate. Alternatively, if an individual obtains bail from a bail bondsman, that bondsman may insist on placing a lien against that person’s property. If the accused jumps bail, the court can sell the property to recoup the bail penalty.

Bakeout

A process used to remove volatile organic compounds (VOCs) by elevating the temperature in an unoccupied, fully furnished and ventilated building.

Balance Sheet

A financial statement that calculates an entity’s assets, liabilities and equity for a defined period. The balance sheet normally displays the equity amount as equaling the total of asset and liability entries.

Balanced Trust

See the Combination Trust entry.

Balconet

A false balcony, typically applied as a decoration. It usually consists of balcony railings outside a window.

Balcony

A projecting platform or porch, that is supported by brackets or cantilevered beams.

Balloon Frame

The basic construction method used with many homes, in which light wood beams (joists) are nailed to supports (studs) to form a framework for exterior and interior finishing. This framing style was a by-product of the industrial revolution which was able to mass-produce necessary building material to meet growing housing needs. The key element of the balloon frame is the web of lighter materials. The balloon frame is still used with many two-story homes and is typified by studs going from the foundation to the top of the second floor.

Balloon Loan

A type of loan whose term is less than the length of the amortization. It is usually a short-term fixed-rate loan which involves small payments for a certain period of time and one large payment for the remaining amount of the principal at a time specified in the contract. For example, a 5-year balloon is one in which the loan matures in 5 years but is amortized for 30 years. [Translation: the monthly payments are calculated for a 30-year pay-back period (so they're lower); but after five years, the loan term expires and the borrower must repay or refinance the entire remaining balance.] The balloon loan interest rate and monthly payments are lower than standard fixed-rate loans, but the entire principal balance is due at the end of the term-hence a large balloon payment. The most typical balloon loans are 5-year and 7-year balloons, although 10-year and 15-year balloons are also available.

Baluster

Small posts or vertical ornaments between stairs and their banisters.

Balustrade

The railing on a porch or stairway. It is usually supported by balusters.

Bank Statement

The periodic itemization of transactions that is provided by depository institutions to its clients. Many lenders will request copies of the applicant’s bank statements to document existence and source of sufficient funds, as well as to provide an alternative method for documenting income. [With "limited documentation" loan program, the applicant can use the average monthly deposits for the past 12 months as his or her qualifying income.]