Title Insurance Dictionary-Glossary

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D

Debt Coverage Ratio
The ration of effective annual net income to annual debt service.

Debt Service
A borrower's periodic payment comprising repayment of principal plus payment of interest on the unpaid balance.

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 gross monthly income. See housing expenses-to-income ratio.

Deed
The written document conveying real property. The Deed must be executed (signed), ACKNOWLEDGED, and DELIVERED to the Grantee. Once recorded at the Courthouse, the original piece of paper is not needed to convey title in the future.

Deed in Lieu
A deed given by a mortgagor to a mortgagee to satisfy a debt and avoid foreclosure.

Deed of Trust
A type of security instrument conveying title in trust to a third party covering a particular piece of property. It is used to secure the payment of a note. Compare, MORTGAGE. In some states, this document is used in place of a mortgage to secure the payment of a note.

Default
Failure to meet legal obligations in a contract, specifically, failure to make the monthly payments on a mortgage.

Deferred Interest
When a mortgage is written with a monthly payment that is less than required to satisfy the note rate, the unpaid interest is deferred by adding it to the loan balance. See negative amortization

Deficiency Judgement
If the foreclosure sale does not bring sufficient proceeds to pay the costs of sale and the note in full, the holder of the note may obtain a judgment against the maker for the difference.

Delinquency
Failure to make payments on time. this can lead to foreclosure.

Delivery
The final, unconditional and absolute transfer of a DEED to the Grantee so that the Grantor may not revoke it. A Deed, signed but held by the Grantor, does not pass title.

Department of Veterans Affairs (VA)
An independent agency of the federal government that guarantees long-term, low-or no-down payment mortgages to eligible veterans.

Deposit
A sum of money given to bind a sale of real estate, or a sum of money given to assure payment, or an advance of funds in the processing of a loan. Also known as earnest money.

Discharge
Unsecured debts are extinguished and the bankruptcy is closed.

Discount
In loan origination, a discount refers to an amount withheld from loan proceeds by a lender. In a secondary marketing sale, a discount is the amount by which the sale price of a note is less than its face value. In both instances, the purpose of a discount is to adjust the yield upward, either in lieu of interest or in addition to interest. The rate of the amount of the discount depends on money market conditions, the credit of the borrower, and the rate or terms of the note.

Discount Point
The amount of money you can choose to pay when you first get a loan to reduce its overall interest rate. Discount points are usually a small fraction of the total amount of your loan—i.e., 1, 2, or 3%—and can lower the interest rate for the entire life of the loan, or just part of it. See Point

Dower
A spouse's interest in the property of a deceased spouse.

Down Payment
Money paid to make up the difference between the purchase price and the mortgage amount.

Due on Sale Clause
A clause in the MORTGAGE that makes the loan non-assumable by providing the noteholder may call the loan immediately due and payable upon a sale or conveyance of an interest in the property. The FNMA/FHLMC form provides that a lease of more than three years or a lease with an option to buy also triggers this provision.

Duel Agency
Representation of opposing parties (buyer and seller) at the same time in the same transaction. This situation most often refers to cases where the Realtor is the agent for both parties.

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