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Real Estate Glossary

Real Estate Glossary
Use this real estate glossary to research terms you might run across in a real estate transaction.

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There are 42 entries in the glossary.
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Term	Definition
Daily interest	The amount of interest the borrower pays the lender calculated on a daily basis. It equals the annual interest rate divided by 360 or 365 and multiplied by the amount of the loan. Also called per diem interest.

De facto	Latin for in fact.

Debenture	A broad term for any unsecured, long-term debt instrument. Corporations use debenture bonds to raise capital. Municipal bonds are debenture bonds.

Debt	An amount owed to another. See installment loan and revolving liability.

Debt Coverage Ratio (DCR)	Ratio of net operating income(NOI) to annual debt service (ADS). DCR = NOI / ADS.

Debt management plan	A bill payment plan for a borrower in a credit emergency. The plan is agreed to by the borrower and creditors.

Debt service	Mortgage Payment.

Debt service coverage	Amount of money left over after other expenses such as taxes, insurance, maintenance and utilities, including an assumption of a reasonable vacancy factor, which can be utilized to service mortgage debt. Lenders usuall y require that the resulting earnings be a certain percentage above the proposed mortgage payments. (Applicable to Apartments and Commercial Properties.)

Debt-to-income ratio	Percentages lenders use to decide whether a loan applicant can afford to make payments on a certain mortgage loan. Lenders may allow first-time home-buyers to use 33\% of monthly income for housing costs, and a total of 38\% for housing costs and all other debt.

Declaration of trust	An instrument that identifies property held by a master for another individual.

Decree	An order or judgment of a court.

Deduct	To subtract an amount from income that is being taxed. Homeowners can deduct interest they pay on their mortgage loans; points they pay at settlement; home improve-ments; and related items.

Deed	The legal document conveying title to a property. The deed is the document that transfers ownership from the seller to you. Only the seller signs the deed at closing, and you'll receive a copy of it. The closing agent will record the deed with you listed as the new property owner. Your name and the names of any other buyers appear on the deed, and it will be sent to you after it is recorded.

Deed of Trust	The document used in some states instead of a mortgage; title is conveyed to a trustee. In some states, a "deed of trust" is used instead of a mortgage. When homeowners sign a deed of trust, they receive title to the property but convey title to a neutral third party -- called a trustee -- until the loan balance is paid in full.

Deed restrictions	Restrictions or limitations to the use of property as noted in a deed.

Deed-in-lieu	A deed given by a mortgagor to the mortgagee to satisfy a debt and avoid foreclosure. Also called a "voluntary conveyance."

Default	Failure to make mortgage payments on a timely basis or to comply with other requirements of a mortgage.

Defective title	Title that is not clear.

Defendant	Party who is defending or denying in a legal action.

Deferred interest	Interest due but unpaid. Mortgages that permit negative amortization (GPMs, and ARMs without a rate cap) will allow deferred interest.

Deferred maintenance	Depreciation caused by failure to maintain properly; sometimes called curable physical depreciation.

Deficiency	In the event of a foreclosure, there is a deficiency when the highest bid in a foreclosure sale is less than the outstanding balance plus foreclosure-related costs.

Delinquency	Failure to make mortgage payments when mortgage payments are due.

Demand note	A debt instrument that allows the lender to call the balance due at any time without prior notice.

Demographics	Statistical information regarding population growth and trends.

Density	A measure of the number of dwelling units per component size of land, such as an acre.

Department of Veterans Affairs	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.The Veterans Administration is a federal government agency authorized to guarantee loans made to eligible veterans under certain conditions. To obtain more information, you can contact the U.S. Department of Veterans Affairs. The VA guarantee allows qualified veterans to buy a house costing up to $203,000 with no down payment. Moreover, the qualification guidelines for VA loans are more flexible than those for either the Federal Housing Administration (FHA) or conventional loans. If you are a qualified veteran, this can be an attractive mortgage program. To determine whether you are eligible, check with your nearest VA regional office.

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. See earnest money deposit.

Depreciation	A decline in the value of property; the opposite of appreciation.

Detached Single-Family Home	The most traditional type of single-family home is one that is "detached." This type of home stands separate from any other housing structure and serves as a place of residence for the occupants.

Direct deposit	A method of having an organization that issues you checks-such as your employer-send the checks straight into your bank account.

Direct Leveraging Loan Program (DLLP)	The Direct Leveraging Loan Program makes it easier and more economical for rural residents to own a home through lower interest rates and no down payment.Under this program, the lender offers up to 50 percent of the mortgage amount as a conventional 30-year, fixed-rate first mortgage and the Rural Housing Service (RHS) offers the balance as a second mortgage at an interest rate that is generally below market. The RHS is part of the U.S. Department of Agriculture.

Direct sales comparison	Property value estimation using the sales prices of similar properties (comparables) and making value adjustments according to such things as square footage, room count, lot size, condition and amenities in order to obtain a realistic fair market value of the property being appraised.

Disbursements	Payments made using cash, checks, or electronic transfers. Disbursements include advances to others as well as payments for goods and services received and other types of payments made. (JFMIP Core, Pg. 48; Common Term) HUDCAPS Core Financial System Standard Accounting Interface, dated 9/30/97

Discount Points	Discount points are often used to describe a type of fee that lenders charge. Discount points are additional funds you pay the lender at closing to get a lower interest rate on your mortgage. A point equals 1 percent of the loan amount. So, if you and your lender agree to a mortgage of $100,000, one point would equal $1,000. Typically, each point you pay for a 30-year loan lowers your interest rate by .125 of a percentage point. If the current interest rate on a 30-year mortgage is 7.75 percent, paying one point would lower the interest rate to 7.625. Ask your lender if you have the option of paying 1, 2, or 3 discount points -- or you can choose not to pay any discount points. It often makes more sense to pay discount points if you plan to stay in your home for a long time.

Discounting	The process of reducing the value of money received in the future to reflect the opportunity cost of waiting to receive the money.

Discretionary spending	Spending you choose to do, that you do not have to do to live.

Dower	The rights of a widow in the property of her husband at his death.

Down Payment	The part of the purchase price of a property that the buyer pays in cash and does not finance with a mortgage.Saving for a down payment is usually one of the most difficult parts of preparing to buy a home. If you believe you have the needed funds, you are in a better position to seek pre-qualification from a lender to get the mortgage that is right for you.Most homeowners rely on a mortgage from a financial institution, and most mortgage products require buyers to include a portion of their own funds towards the purchase of the home. This is called the down payment. Lenders feel more secure when buyers include a down payment, indicating they are less likely to walk away from their investment if their finances take a downturn.Historically, buyers usually made a down payment that totaled 20 percent of the home's purchase price. Under this scenario, a down payment for a $100,000 home is $20,000. But today, new mortgage products allow buyers to put down as little as 3 percent to 5 percent, provided private mortgage insurance is obtained. The down payment for a $100,000 home with 5 percent down payment is just $5,000.Sources for down payments may come from buyers' savings accounts, checking accounts, stocks and bonds, life insurance policies, and gifts.

Due-on-sale clause	A provision in a mortgage allowing the lender to demand repayment in full if the borrower sells the property securing the mortgage.

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.

Due-on-transfer Provision	This terminology is usually used for second mortgages. See due-on-sale provision.

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