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D
Debt-to-Income
Ratio (DTI) -
The ratio of aggregate monthly debt
to aggregate monthly income. top
of page
Deed -
A legal document which affects the
transfer of ownership of real estate
from the seller to the buyer.
top
of page
Deed of Trust -
Synonymous to a mortgage. A deed of
trust or mortgage is obtained, depending
on the state in which the borrower
will reside. top
of page
Default -
The failure to make payments on a
loan. top
of page
Delinquency -
Late- or non-payments of principal,
interest, taxes, or insurance.
Deposit -
A lump sum given in advance as security.
A deposit is always paid of a larger
amount to be paid in the future. In
mortgage and real estate terms, this
is called the "earnest money
deposit." top
of page
Depreciation -
In real estate and mortgage terms,
the decline in the property value.
top
of page
Discount -
Difference between the face amount
of a note or mortgage and the price
at which the instrument is sold in
the secondary market. top
of page
Discount Points -
A term used in government subsidized
loans, such as FHA and VA loans. Refers
to any "points" (one percent
of the loan amount) paid in addition
to the one percent loan origination
fee. top
of page
Down Payment -
Money paid by a buyer from his own
funds, as opposed to that portion
of the purchase price which is financed.
top
of page
E
Earnest Money Deposit -
A deposit made by a potential home
buyer to show that they are serious
about purchasing the property. top
of page
Easement -
Giving other persons, other than the
owner, access to a property. top
of page
Eminent Domain -
The government right to take private
property for public use depended on
the payment of its fair market value.
top
of page
Encumbrance -
Any lien against a property or any
restriction it its use, such as an
easement; a right or interest in a
property held by one who is not the
legal owner. top
of page
Equal Credit Opportunity Act (ECOA)
-
The act declaring the elimination
of discrimination on the basis of
age, sex, and race in finance. top
of page
Equity -
The difference between the current
market value of a property and the
principal balance of all outstanding
loans. top
of page
Escalator Clause -
A clause in a loan providing for increases
in payments or interest based on pre-determined
schedules or on a specific economic
index, such as the consumer price
index. top
of page
Escrow -
A third party agent that receives,
holds, and/or disburses certain funds
or documents upon the performance
of certain conditions. For example,
an earnest money deposit is put into
escrow until the transaction is closed.
Only then can the seller receive the
deposit. top
of page
Escrow Account (impound account) -
An account that a borrower can hold
with a lender once a purchase transaction
is closed. This requires borrowers
to pay more than the principal and
interest each month. The overage is
put into escrow, which the lender
uses to pay items like property taxes
and homeowner's insurance when they
are due. This eliminates the actual
number of payments that a homeowner
has to worry about, but not the amount
that has to actually be paid. top
of page
Escrow Analysis -
An analysis performed by a lender
each year to escrow accountholders
to ensure that the correct amount
of money is being collected to cover
anticipated payments. top
of page
Escrow Fee -
These costs cover the preparation
and transmission of all home purchased-related
documents and funds. Escrow fees range
from several hundred to over a thousand
dollars, based on the purchase price
of your home. Not all states require
funds to be put into escrow accounts
for closing. top
of page
Estate -
The ownership interest an individual
holds in real property. This is also
the sum total of all the real property
and personal property owned by an
individual at time of death. top
of page
Eviction -
The legal removal of real property
occupants for unlawful actions carried
out by those occupants. top
of page
F
Fair Credit Reporting Act -
A law that protects consumer that
regulates the reporting of consumer
credit by agencies and establishes
procedures for correcting errors on
an individual record. top
of page
Fannie Mae (FNMA) -
The Federal National Mortgage Association
is a congressionally chartered, shareholder-owned
company. This organization is the
nation's largest supplier of home
mortgage funds. top
of page
Fannie Mae's Community Home
Buyer's Program -
A program that offers flexible underwriting
guidelines to subsidize a low- to
moderate-income family's purchase
of a home. The program usually decreases
the total amount of cash needed to
purchase a home. top
of page
Federal Housing Administration
(FHA) -
An agency under the U.S. Department
of Housing and Urban Development (HUD),
it insures loans made by approved
lenders to qualified borrowers, in
accordance with its regulations. top
of page
Fees -
Up-front costs associated with a loan.
Clicking on the numeric value shown
under the "Fees Detail"
column on the quotes results page
will display detailed information
about the financial institution's
fees and requirements pertaining to
that rate. top
of page
Fee Simple -
The best title that one can obtain;
unqualified and conveys the highest
bundle of rights. top
of page
FHA Loan -
A government-backed mortgage loan
supported by the US FHA and the Department
of Housing and Urban Development (HUD).
top
of page
Finance Charge -
The total dollar amount your loan
will cost you. It includes all interest
payments for the life of the loan,
any interest paid at closing, your
origination fee and any other charges
paid to the lender and/or broker.
Appraisal, credit report and title
search fees are not included in the
finance charge calculation. top
of page
Firm Commitment -
A lender's agreement to provide a
loan to a specific borrower on a specific
property. top
of page
First Mortgage -
A mortgage that has priority over
other mortgages. top
of page
Fixed-Rate Mortgage -
A mortgage where the interest rate
does not change for the life of the
loan. top
of page
Float -
Between the time of application and
closing, a borrower may choose to
bet on interest rates decreasing by
electing to float. Floating is essentially
choosing not to lock the interest
rate. Since it is the borrower's responsibility
to lock his or her rate before (or
at) closing, choosing to float is
considered risky and may result in
a higher interest rate. Request information
from your lender regarding lock procedures.
top
of page
Forbearance -
The postponement for a limited time
of a portion or all the payments on
a loan when a borrower is delinquent.
top
of page
Foreclosure -
A legal procedure in which real estate
is sold by the lender to pay a defaulting
borrower's debt . top
of page
401(k)/403(b) -
An investment plan sponsored by employers
that allows individuals to set aside
tax-deferred income for retirement
or emergency purposes. A 401(k) applies
to private corporations, while a 403(b)
applies to non-profit organizations.
top
of page
401(k)/403(b) loan -
A loan that can be taken against the
amount accumulated in the 401(k)/403(b)
plans, if so allowed by the plan administrator.
Loans against these plans are an acceptable
source of down payment for most types
of other loans. top
of page
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