| Terms D-G |
| Debt
Ratio |
| The
allowable percentage of debt in relationship to a borrower's monthly
income, it is used as an assessment for qualification for mortgage
loans. |
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| Deed |
| The
legal document conveying title of property from one owner to another. |
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| Deed
Of Trust |
| An
instrument used in many states in place of a mortgage. Title is transferred
to a trustee by the borrower, with the lender as beneficiary, until
the loan balance has been paid. This document gives a lender the right
to foreclose on a piece of property if the borrower defaults on the
loan. |
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| Default |
| Failure
to meet an obligation of duty, such as to comply with timely requirements
of a mortgage. |
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| Deferred
Interest Mortgage |
| A
mortgage in which the payment is not sufficient to cover the principal
and the interest and the payment portion of the interest is postponed
until a certain date at which time the interest postponed is added
to the principle owing. |
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| Deficiency
Judgment |
| A
Court order against a borrower if the lender loses money as a result
of a foreclosure. The deficiency judgment would be for the difference
of the mortgage debt and the amount recovered in a foreclosure sale. |
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| Deposit
|
| A
sum of money given to bind a sale of real estate in advance of a larger
amount being expected in the future. Also known as earnest money. |
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| Depreciation
|
| A
decline of value in real property brought about by age, physical deterioration,
functional or economic obsolescence. |
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| Discount
Buydown |
| The
paying of discount points to lower the interest rate temporarily or
permanently for a home purchaser. |
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| Discount
Points |
| A
device used to equalize interest rate yields for lenders and investors.
A "point" is one percent of the loan amount. Each discount
point paid on a 30-year Fixed Rate Mortgage increases to lenders yield
by approximately one fifth of a perfect in interest. |
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| Discounted
Loan |
| When
the note rate on a loan is less than the market rate, additional points
may be required by the lender to raise the yield on the loan to the
market rate. |
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| Disintermediation
|
| A
condition that occurs when funds are being withdrawn from savings
institutions by depositors who are in turn investing in instruments
yielding a higher return. The result is less mortgage money available
for loans, since the short-term instruments being purchased are normally
not made available for real estate loans. |
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| Down
Payment |
| The
initial investment in purchasing a property, usually a percentage
of the sale price, that the buyer pays in cash and does not finance
with a mortgage |
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| Earnest
Money |
| A
sum of money given to bind a sale of real estate in advance of a larger
amount being expected in the future. Also known as a deposit. |
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| Effective
Age |
| An appraisal term for
the age of a structure as estimated by its condition rather than actual
age which takes into consideration rehabilitation and maintenance.
The actual age of a building may be shorter or longer than its effective
age. |
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| Equal
Credit Opportunity Act (ECOA) |
| U.S. Federal law, under
the Consumer Credit Protection Act, affording people of all races,
genders, religions, ages, marital status, etc. an equal chance to
borrow money. |
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| Equity |
| A determination of the
value a property owner has in real estate once the obligations and
costs of selling are deducted. |
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| Equity
Participation |
| An
investor or lender may offer lower interest rates to a borrower in
return for sharing in the appreciation or expected equity gain. This
concept is very common in commercial real estate. |
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| Equity
Sharing |
| Any
two or more purchasers that wish to purchase real estate together
can divide the property's appreciation. A lender or investor can also
offer a lower interest rate in return for a share of anticipated equity. |
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| Escrow
|
| In
general, a procedure whereby a disinterested third party handles legal
documents and/or funds on behalf of a seller or buyer. These funds
are set aside in an escrow account and held in trust usually to pay
taxes and insurance on real estate. |
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| Federal
Home Loan Mortgage Corporation (FHLMC) |
| The
Federal National Mortgage Association, which is a congressionally
chartered, shareholder-owned company that is the largest national
supplier of home mortgage funds.It is commonly known as Freddie Mac.
The company buys mortgages from lending institutions, pools them with
other loans, and sells shares to investors. Detailed information may
be found at http://www.freddiemac.com. |
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| Federal
Housing Administration (FHA) |
| An
agency of the federal government, the Division of the Department of
Housing and Urban Development, both sets standards for the underwriting
of private mortgages and insures residential mortgages made by private
lenders. |
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| Federal
Housing Administration (FHA) Loans |
| Federal
Housing Administration (FHA) low-rate loans are available to Americans
with smaller incomes who are interested in modestly priced homes.
Down payment requirements are usually lower than the prevailing ones. |
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| Federal
National Mortgage Association (FNMA) |
| The
U.S.'s largest supplier of mortgages to home buyers and owners, a
corporation established by Congress and owned by stockholders. It
is commonly referred to as 'Fannie Mae,' this government-sponsored
enterprise is chartered by Congress. This federally chartered agency
buys mortgages from lending institutions, pools them with other loans,
and sells shares to investors. Detailed information may be found at
http://www.fanniemae.com |
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| Firm
Commitment |
| A
promise from a lender to make a mortgage loan with a specified amount
of money on specific terms. A promise by the FHA to insure a mortgage
for a specific property and purchaser. |
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| Fixed-Rate
Mortgage |
| The
interest rate you pay and the monthly principal and interest payments
are agreed upon from the outset and will not change throughout the
entire term of the mortgage. |
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| Foreclosure |
| A
legal process by which the lender under a defaulted mortgage forces
a sale of mortgaged property because the borrower has not met the
terms of the mortgage. |
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| Free
Standing Store |
| A
commercial building meant to be occupied by a single user. It is often
found near major shopping centers, on major routes, and fills a specific
need in the community |
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| Fully
Indexed Note Rate |
| The
index plus the lenders gross profit margin. If the index is 10% and
the lenders profit margin is 2%, the fully indexed note rate would
then be 12%. |
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| Garden
Apartments |
| Apartment
buildings that offer a unit that enjoys direct access to a lawn, courtyard
or other garden-like area. |
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| General
Warranty Deed |
| A
deed containing a binding agreement whereby the seller agrees to protect
the buyer against being dispossessed because of any adverse claim
against the property. |
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| Government
National Mortgage Association (GNMA) |
| A
government-owned corporation within the U.S. Department of Housing
and Urban Development, it is also referred to as 'Ginnie Mae,’.
This government agency guarantees the payment of principal and interest
on all of its pass-through securities, and its guarantee is backed
in turn by the full faith and credit of the U.S. Government. |
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| Graduated
Payment Mortgage (GPM) |
| A
mortgage that usually starts the borrower with low payments that are
gradually increased over five to ten years, before leveling off for
the remainder of the term of the loan until the loan is fully amortized.
Negative amortization usually occurs until the payment reaches the
level payment stage. Usually government insured loans (VA or FHA) |
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| Graduated
Payment Adjustable Rate Mortgage (GPARM) |
| A
conventional mortgage that would start the borrower out with low payments
which are gradually increased over three to six years, until the loan
is fully amortized. Negative amortization usually occurs until the
payment reaches the level payment stage. |
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| Gross
Margin (Profit Margin) |
| The
difference between the interest rate chargeable on an Adjustable Rate
and the rate set by the index rate upon which the mortgage rate is
based. This is the lender's profit margin. |
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| Growing
Equity Mortgage (GEM) |
| This
is a long-term mortgage whereby the borrower agrees to increase his
payment each year by an agreed amount. The added money per payment
is applied directly to the outstanding principal on the mortgage.
The mortgage thereby is paid off in a shorter number of years. |
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