Glossary of commonly used terms and phrases

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Debt Consolidation Refinance - A refinance transaction that uses the equity in your house or monies from your mortgage to consolidate your debt into one low rate monthly payment.
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Debt Ratio - The total of the proposed monthly payments divided by the total monthly income.
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Debt Service Coverage Ratio - The ratio calculated by dividing the property's cash flow available for debt service by the annual principal and interest requirements. ('DSC')
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Declaration of Trust - A written document from one having legal title to a property, that the property is held in trust for the benefit of another.
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Deed - A document that transfers real estate from one party to another. Officially recorded in government records.
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Deed of Trust - Like a mortgage, a security instrument whereby real property is given as security for a debt. However, in a deed of trust there are three parties to the instrument
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Deed-in-Lieu - A deed given by a mortgagor to the mortgagee to satisfy a debt and avoid foreclosure. Also called a 'voluntary conveyance.'
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Default - Failure to make mortgage payments on a timely basis or to comply with other conditions of a mortgage.
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Deficiency - The difference between the balance on a loan and profits from the sale of the loan collateral.
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Deficiency Judgment - A court order to pay the balance owed on a loan if the proceeds from the sale of the security are insufficient to pay off the loan. Deficiency judgments are not allowed in all states.
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Delegated Underwriting and Servicing (DUS) - Fannie Mae allows certain lenders to process and approve FNMA’s multifamily loans wherein the lender takes a percentage of the risk.
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Delinquency - A loan in which a payment is overdue but not yet in default.
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Delivery - The actual placement of the property to the grantee, usually by delivery of a deed to the buyer or by recording of the deed.
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Demand Note - There is no set day for repayment of a this note, but it is due on the “demand” of the lender.
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Density - The number of persons or buildings occupying a certain amount of land. An acre is usually used.
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Department of Veterans Affairs (VA) - An agency of the federal government that guarantees residential mortgages made to eligible veterans of the military services. The guarantee protects the lender against loss and thus encourages lenders to make mortgages to veterans.
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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.
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Depreciation - A decline in the value of property; the opposite of appreciation.
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Direct Reduction Mortgage - An amortized mortgage in which principal and interest payments are paid monthly with interest being computed on the remaining balance.
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Discount Points - Charges levied by the mortgage lender to obtain a better interest rate, usually payable at closing. One point represents 1% of the mortgage loan amount.
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Discount Rate - The Federal Reserve System’s rate of interest charged to banks that buy money from them. An increase in the rate discourages banks from borrowing. A compound interest rate used to convert expected future income into a present value income.
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Disposition of Real Estate Statement - A requirement for the borrower that they will occupy the property being purchased even though they may own other property. The borrower must state that the other property will be sold or rented.
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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.
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Documentary Transfer Tax - A tax charged by the city or county of a property based on the sales price upon the transfer of that property.
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Double Declining Balance Method of Depreciation - A use of the declining balance method, but with double the depreciation allowable by straight line. This is an accelerated method.
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Double Escrow - Two concurrent escrows on the same property, having the same buyer and seller of the property. Escrow 1 buys from escrow 2 and then sells the same property to another. This process is illegal in many states unless a full disclosure is made.
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Doublewide Trailer - A type of manufactured housing that comes as two units joined together at the lot or park it is to be placed on.
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Dower - The rights of a widow or widower of the property upon the spouse’s death.
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Down Payment -The part of the purchase price, which the buyer pays in cash and does not finance with a mortgage.
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Drive by Appraisal - A type of appraisal where valuations are based only on public records and exterior inspections.
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Dual Agency - The representation of both the buyer and seller by the same agency at the same time. Full disclosures are required.
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Due Diligence - An investigation or audit by the investor of a potential investment. Due diligence examines all material facts in regards to a sale.
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Due-on-sale Provision - A provision in a mortgage that allows the lender to demand repayment in full if the borrower sells the property that serves as security for the mortgage.
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