Mortgage and Real Estate Terms – D

DEBT CONSOLIDATION – paying off, with the proceeds from a refinance or home equity loan, all or most of your higher-interest debts, such as credit card balances. Clearly the most popular type of homeowner type loan in decades – – saves hundreds of dollar monthly and may be completely tax deductible. Today these loans are ranging typically in the $30,000 to $50,000 size. Monthly family budget relief in the $400 to $800 range or more are common.

DEBT SERVICE – the combined principal and interest you pay on loans each month.

DEBT-REDUCTION PLAN – a strategy recommended for those borrowers wishing to use the smart idea of a home equity loan for debt consolidation. Be careful not to run up credit cards again, could cost you lost time. Be prudent, it’s easy once you’re on top of it.

DEBT-TO-INCOME RATIO – the ratio, expressed as a percentage, which results when a borrower’s monthly payment obligation on long-term debts is divided by his or her net effective income (FHA/VA loans) or gross monthly income (conventional loans). If 35% or more of your gross monthly income is going out in bill paying, you’re a prime candidate for a bill consolidation.

DEED OF TRUST – a security instrument used in some states in lieu of a mortgage.

DEED OF TRUST NOTE – the promissory note that is used with a Deed of Trust on a mortgage loan transaction.

DEFAULT – failure to make payments as agreed to.

DELINQUENCY – failure of a borrower to make timely payments under a loan agreement.

DEPOSIT/EARNEST MONEY DEPOSIT – a sum of money given to (1) bind a sale of real property, or (2) assure payment or an advance of funds in the process of a loan.

DEPRECIATION – a decline in value of a building or other real property improvement, resulting from age, physical wear, and economic or functional obsolescence. This figure is deducted annually from net income.

DISCLOSURE – information relevant to specific transactions that is required by law.

DOCUMENTARY STAMP – a mark stamped onto a deed certifying the amount of transfer tax paid. Referred to as tax stamps in certain areas.

DOWN PAYMENT – an amount paid in cash to the seller when a home is purchased. The down payment is the difference between the purchase price and the mortgage amount, and is traditionally 10 to 20 percent of the purchase price; although many loans are now available with smaller down payments, and in some cases (with decent/average credit scores) no down payment is needed. Visit our 100% mortgage financing and home loan purchase sections for more information on buying a home with no money down.