Loan Services: Mortgage Loans
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Date of last delinquency
The date when your credit was last contractually delinquent for one or more months
The date of last delinquency shows up on your credit report. Even if you make a partial payment of a debt, the creditor can still report you to a credit bureau as delinquent.
See: Delinquency
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Debt
Money owed to an individual or a business
See: Acceptable debt
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Deed
A legal document that transfers ownership (title) of a property
See: Grant deed, Quitclaim deed
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Deed of trust
A document that gives the deed of the property to the lender until the buyer has paid the loan in full
In many states, a deed of trust is used in place of a mortgage. Essentially a deed is like a mortgage except that a deed of trust involves a third party called a trustee, usually a title insurance company. A deed of trust transfers the title (ownership) of the property to the trustee while you still retain the right to live in and use the property. The lender or trustee holds the original deed of trust until you repay the loan. Unlike a mortgage, a deed of trust also gives the lender the right to foreclose on your property without taking you to court first.
Compare: Mortgage
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Default
When the borrower fails to uphold his part of the agreement
Default happens when a home owner fails to comply with the terms of the note and mortgage such as failing to make payments on the mortgage or keep the property insured.
See: Foreclosure
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Deficiency judgement
The amount for which a borrower is personally responsible for if a foreclosure sale does not cover the total amount owed on the mortgage
If you somehow default on a mortgage, the lender may foreclose on your property, but if the amount the house sells for does not cover the balance on the loan (including any fees) the lender may also be able to sue you. Only some states give the lender the right to a deficiency judgment.
See: Judicial foreclosure, Trustee's sale
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Delayed adjustable rate mortgage
An ARM that has a longer initial period than usual
Delayed adjustable rate mortgages (Delayed ARMs) have a fixed initial interest rate after which adjustments are made, usually annually, for the life of the loan. A delayed ARM gives you fixed monthly payments for a longer period of time than traditional ARMs. Often, people choose this type of loan if they plan to sell the property before the ARM starts to fluctuate. Delayed ARMs are also called intermediate ARMs.
See: Adjustable rate mortgage
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Delinquency
Being behind on paying back a creditor
If you’ve missed one or more payments on any debt, your account is considered delinquent.
See: Date of last delinquency
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Deposit
A sum of money that a buyer gives to the seller when making an offer on a home
To a seller, a deposit shows that the buyer is serious about buying the property. A deposit is not required by law. It is smart to put down as little as possible because it is possible the deposit may be lost if the deal falls through due to fault on the part of the buyer. If the deal works out, your deposit is then applied to your total closing costs to purchase the home. The deposit is also called earnest money.
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Deposit receipt
A document that can perform as both the receipt for a deposit and the purchase agreement
Some states use a deposit receipt to outline a buyer’s offer on a home, including the description of the property and how it will be financed along with how the deposit money is handled in the event the deal breaks down. If the seller accepts the offer and signs the document, the deposit receipt becomes the legal purchase agreement for the deal. The deposit receipt is also called a sales contract.
See: Deposit
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Discount point
An exchange, where by, more is paid in closing costs to receive a lower interest rate on the loan
The basic idea of discount points is to pay up-front in order to save over the life of the loan. One discount point equals one percent of the loan amount. So, if you pay 2 discount points on a $200,000 loan you would pay $4,000 up-front at closing. Each discount point you pay will typically lower your loan's rate by .25%, but the amount can vary based on term, loan amount, fixed or ARM etc. Discount points may be a good idea if you plan to hold onto your home for a long period of time. This allows you to offset the costs of paying for the points. Some sellers will pay some of the discount points as a way to make their homes more attractive to buyers.
Discount points lower your interest rate. The longer that you hold a mortgage, the longer you will enjoy the savings of the lower interest rate.
See: Point, Origination fee, Buydown
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Disposable income
Your net income after taxes and regular monthly bills is the income you are able to spend
To calculate your disposable income, start with your salary and subtract taxes and any regular monthly bills you pay.
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Down payment
The portion of the house purchase price that the buyer agrees to pay up front with personal funds
A required 20% down payment is standard among lenders. There are financing options to assist you in paying the down payment. Three common choices are: (1) mortgage insurance, where you pay a fixed monthly premium in return for a lower down payment; (2) government-insured loans that let you put down less, but limit how much you can borrow; and (3) piggyback loans, which require a 10% down payment. You get 2 loans, one for 80% of the purchase price and the other, usually at a higher rate, for 10% of the purchase price.
See: Mortgage Insurance (MI)
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Due-on-sale clause
Part of a loan agreement that gives a lender the right to demand repayment of a mortgage when the property is sold
Lenders include a due-on-sale clause in a mortgage to prevent buyers from taking over a seller's existing mortgage. A due-on-sale clause is a type of acceleration clause.
See: Acceleration clause, Assumable mortgage
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