Debt-to-Income Ratio (D/I)
The ratio of the borrower's total monthly
obligations, including housing expenses and
recurring debts, to monthly income. It is used to
determine the borrower's capacity to repay the
mortgage and all other debts.
Deed
Legal document by which title to real property is
transferred from one owner to another. The deed
contains a description of the property, and is
signed, witnessed, and delivered to the buyer at
closing.
Deed-in-lieu
A deed given by a mortgagor to the mortgagee to
satisfy a debt and avoid foreclosure.
Deed of Trust
A document, used in many states in place of a
mortgage, whereby a trustee pending repayment of
the loan holds title to the property.
Default
Failure to meet legal obligations in a contract,
including failure to make payments on a loan.
Delinquency
Failure to make payments as agreed in the loan
agreement.
Department of Housing and Urban Development
(HUD)
The U.S. government agency that administers FHA,
GNMA and other housing programs.
Deposit
A sum of money given to bind the sale of real
estate, or a sum of money given to ensure payment
or an advance of funds in the processing of a
loan.
Depreciation
A decline in the value of property; the opposite
of appreciation.
Discount
The amount by which the sales price of a note (or
financial instrument) is below or less than its
face value. The purpose of a discount is to adjust
the yield upward either in lieu of interest or in
addition to interest. Discount points are payable
to the lender by the borrower or seller to
increase the lender's effective yield. One point
is equal to 1% of the loan.
Discount Points (or Points)
Points are an up-front fee paid to the lender at
the time that you get your loan. Each point equals
one percent of your total loan amount. Points and
interest rates are inherently connected: in
general, the more points you pay, the lower the
interest rate you get.
Documentary Stamps
A State tax, in the forms of stamps, required on
deeds and mortgages when real estate title passes
from one owner to another. The amount of stamps
required varies with each State.
Down Payment
The amount of your home's purchase price you need
to supply up front in cash to get your loan. For
conventional loans, you should strive for a down
payment that's at least 20% of your home's value,
since lenders generally do not require private
mortgage insurance with a down payment of at least
20% of your home's purchase price. (Note, however,
that FHA and VA loans have different policies
regarding insurance.)
Due-on-Sale Clause
Provision in a mortgage or deed of trust allowing
the lender to demand immediate payment of the loan
balance upon sale of the property.
