Exquisite Homes. Impeccable Service. Successful Results.

D-G Terms

Debt Ratio
The allowable percentage of debt in relationship to a borrower's monthly income, it is used as an assessment for qualification for mortgage loans.
back

Deed
The legal document conveying title of property from one owner to another.
back

Deed Of Trust
An instrument used in many states in place of a mortgage. Title is transferred to a trustee by the borrower, with the lender as beneficiary, until the loan balance has been paid. This document gives a lender the right to foreclose on a piece of property if the borrower defaults on the loan.
back

Default
Failure to meet an obligation of duty, such as to comply with timely requirements of a mortgage.
back

Deferred Interest Mortgage
A mortgage in which the payment is not sufficient to cover the principal and the interest and the payment portion of the interest is postponed until a certain date at which time the interest postponed is added to the principle owing.
back

Deficiency Judgment
A Court order against a borrower if the lender loses money as a result of a foreclosure. The deficiency judgment would be for the difference of the mortgage debt and the amount recovered in a foreclosure sale.
back

Deposit
A sum of money given to bind a sale of real estate in advance of a larger amount being expected in the future. Also known as earnest money.
back

Depreciation
A decline of value in real property brought about by age, physical deterioration, functional or economic obsolescence.
back

Discount Buydown
The paying of discount points to lower the interest rate temporarily or permanently for a home purchaser.
back

Discount Points
A device used to equalize interest rate yields for lenders and investors. A "point" is one percent of the loan amount. Each discount point paid on a 30-year Fixed Rate Mortgage increases to lenders yield by approximately one fifth of a perfect in interest.
back

Discounted Loan
When the note rate on a loan is less than the market rate, additional points may be required by the lender to raise the yield on the loan to the market rate.
back

Disintermediation
A condition that occurs when funds are being withdrawn from savings institutions by depositors who are in turn investing in instruments yielding a higher return. The result is less mortgage money available for loans, since the short-term instruments being purchased are normally not made available for real estate loans.
back

Down Payment
The initial investment in purchasing a property, usually a percentage of the sale price, that the buyer pays in cash and does not finance with a mortgage
back

Earnest Money
A sum of money given to bind a sale of real estate in advance of a larger amount being expected in the future. Also known as a deposit.
back

Effective Age
An appraisal term for the age of a structure as estimated by its condition rather than actual age which takes into consideration rehabilitation and maintenance. The actual age of a building may be shorter or longer than its effective age.
back

Equal Credit Opportunity Act (ECOA)
U.S. Federal law, under the Consumer Credit Protection Act, affording people of all races, genders, religions, ages, marital status, etc. an equal chance to borrow money.
back

Equity
A determination of the value a property owner has in real estate once the obligations and costs of selling are deducted.
back

Equity Participation
An investor or lender may offer lower interest rates to a borrower in return for sharing in the appreciation or expected equity gain. This concept is very common in commercial real estate.
back

Equity Sharing
Any two or more purchasers that wish to purchase real estate together can divide the property's appreciation. A lender or investor can also offer a lower interest rate in return for a share of anticipated equity.
back

Escrow
In general, a procedure whereby a disinterested third party handles legal documents and/or funds on behalf of a seller or buyer. These funds are set aside in an escrow account and held in trust usually to pay taxes and insurance on real estate.
back

Federal Home Loan Mortgage Corporation (FHLMC)
The Federal National Mortgage Association, which is a congressionally chartered, shareholder-owned company that is the largest national supplier of home mortgage funds.It is commonly known as Freddie Mac. The company buys mortgages from lending institutions, pools them with other loans, and sells shares to investors. Detailed information may be found at http://www.freddiemac.com.
back

Federal Housing Administration (FHA)
An agency of the federal government, the Division of the Department of Housing and Urban Development, both sets standards for the underwriting of private mortgages and insures residential mortgages made by private lenders.
back

Federal Housing Administration (FHA) Loans
Federal Housing Administration (FHA) low-rate loans are available to Americans with smaller incomes who are interested in modestly priced homes. Down payment requirements are usually lower than the prevailing ones.
back

Federal National Mortgage Association (FNMA)
The U.S.'s largest supplier of mortgages to home buyers and owners, a corporation established by Congress and owned by stockholders. It is commonly referred to as 'Fannie Mae,' this government-sponsored enterprise is chartered by Congress. This federally chartered agency buys mortgages from lending institutions, pools them with other loans, and sells shares to investors. Detailed information may be found at http://www.fanniemae.com
back

Firm Commitment
A promise from a lender to make a mortgage loan with a specified amount of money on specific terms. A promise by the FHA to insure a mortgage for a specific property and purchaser.
back

Fixed-Rate Mortgage
The interest rate you pay and the monthly principal and interest payments are agreed upon from the outset and will not change throughout the entire term of the mortgage.
back

Foreclosure
A legal process by which the lender under a defaulted mortgage forces a sale of mortgaged property because the borrower has not met the terms of the mortgage.
back

Free Standing Store
A commercial building meant to be occupied by a single user. It is often found near major shopping centers, on major routes, and fills a specific need in the community
back

Fully Indexed Note Rate
The index plus the lenders gross profit margin. If the index is 10% and the lenders profit margin is 2%, the fully indexed note rate would then be 12%.
back

Garden Apartments
Apartment buildings that offer a unit that enjoys direct access to a lawn, courtyard or other garden-like area.
back

General Warranty Deed
A deed containing a binding agreement whereby the seller agrees to protect the buyer against being dispossessed because of any adverse claim against the property.
back

Government National Mortgage Association (GNMA)
A government-owned corporation within the U.S. Department of Housing and Urban Development, it is also referred to as 'Ginnie Mae,’. This government agency guarantees the payment of principal and interest on all of its pass-through securities, and its guarantee is backed in turn by the full faith and credit of the U.S. Government.
back

Graduated Payment Mortgage (GPM)
A mortgage that usually starts the borrower with low payments that are gradually increased over five to ten years, before leveling off for the remainder of the term of the loan until the loan is fully amortized. Negative amortization usually occurs until the payment reaches the level payment stage. Usually government insured loans (VA or FHA)
back

Graduated Payment Adjustable Rate Mortgage (GPARM)
A conventional mortgage that would start the borrower out with low payments which are gradually increased over three to six years, until the loan is fully amortized. Negative amortization usually occurs until the payment reaches the level payment stage.
back

Gross Margin (Profit Margin)
The difference between the interest rate chargeable on an Adjustable Rate and the rate set by the index rate upon which the mortgage rate is based. This is the lender's profit margin.
back

Growing Equity Mortgage (GEM)
This is a long-term mortgage whereby the borrower agrees to increase his payment each year by an agreed amount. The added money per payment is applied directly to the outstanding principal on the mortgage. The mortgage thereby is paid off in a shorter number of years.
back

© 2019 Debbie McNally. All Rights Reserved.