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Glossary - D

Mortgage Brokers Glossary - D

Debt-to-income Ratio:

A comparison of gross income to housing with non-housing operating expense; by way of the FHA, the monthly mortgage payment ought to be no more than 29% of monthly gross income previous to taxes and the mortgage payment mutual with non-housing debts must not exceed 41% of income.

Deed:

The document which moves ownership of a property.

Deed-in-lieu:

To pass up foreclosure, a legal document is given to the lender to fulfill the obligation to pay back the balance; this process doesn’t permit the borrower to remain in the house but helps avoid the time, costs and effort related with foreclosure.

Default:

Failure to make monthly mortgage payments as agreed, or to meet certain other terms of a mortgage agreement.

Delinquency:

Failure of a borrower to make well-timed mortgage payments under a loan agreement.

Discount Point:

In general paid at closing and normally calculated to be equivalent to 1% of the total loan amount, discount points are paid to diminish the interest rate on a loan.

Double-Up:

This feature (not offered by all lenders) allows you to double up your mortgage payments anytime without penalty. This feature is often associated with the ability to "skip" an equivalent number of payments. This can be used either to accelerate the pay-off of a mortgage (as it is an enhanced prepayment privilege) or to manage a volatile cash flow. For example, commission-based individuals such as Realtors could "double-up" with each commission cheque, and "skip" during low cash flow periods.

Down Payment

The amount of cash paid towards the purchase transaction by the buyer of a home. This is also known as the purchaser's initial "equity" in the property, but is used by a lender to judge the personal commitment to the property. For example, a lender considers that, if a buyer saved the down payment, or received it as a gift from a loved one, they will be far more committed to maintaining the property value and making the mortgage payments than if they acquired it for "no money down".