Home Loan Glossary – D

Debt

Debt is the amount of money that a borrower owes to a lender. See Installment Loan and Revolving Liability.

Debt-To-Income Ratio

This is a ratio that compares what an individual owes monthly to repay their debts to their gross monthly income. A ratio that is too high can indicate that further borrowing may be harmful to a person’s financial stability.

Deed

A deed is a document that legally transfers ownership of a property from one party to another.

Deed-In-Lieu

Also referred to as a "voluntary conveyance", a deed-in-lieu is given to a lender by a borrower, to pay a debt and avoid foreclosure.

Deed Of Trust

A deed of trust is used in some states instead of a mortgage. The borrower gives the lender the deed to the property, but the lender can only sell the property if the borrower fails to meet the terms of the home loan.

Default

Default means to fail to pay money due when expected. So default on a mortgage occurs when a borrower does not honor the terms of a mortgage agreement, or fails to make loan payments when they are due.

Deferred Interest

Deferred interest is the gradual increase in mortgage debt that occurs when the monthly loan payments do not cover both principal and interest amounts due. Also called "negative amortization," the unpaid amount is added to the outstanding principal balance.

Delinquency

Delinquency is the failure to pay mortgage payments on time. It means that the required scheduled payment has not been received by the lender or the servicer of the loan.

Department Of Veterans Affairs (VA)

The Department of Veterans Affairs (VA) is a federal government agency that guarantees residential mortgages made to eligible military veterans. The guarantee safeguards lenders against loss and thus encourages them to make mortgages to veterans, even with very low down payments.

Deposit

A deposit in a real estate transaction is a partial payment that represents a pledge of full payment in the future. For example, a sum of money given to secure the sale of a home is called a deposit. It can also be money given as an early payment of funds during the processing of a loan. See Earnest Money Deposit.

Depreciation

A decrease in the value of a property, due to economic or structural conditions such as wear and tear, is known as depreciation. It is the opposite of appreciation.

Discount Points

Discount points are amounts paid to a lender up-front that discount or lower the interest rate over the life of the loan. The term "point" means that the amount paid is some percentage of the loan amount. See Point.

Down Payment

A down payment is the part of the purchase price of a home that the buyer pays up-front, in cash, and which is not covered by the home loan. In other words, the down payment is the amount the buyer must pay out of his or her own pocket.

Draw Period

The period of time when a borrower may use a line of credit to withdraw cash is known as the draw period.

Due-On-Sale Provision

This is a clause in a mortgage home loan agreement. It allows the lender to claim full repayment of the loan if the borrower sells the property that is collateral for the loan.

Due-On-Transfer Provision

This term is usually applied to second mortgages, but has essentially the same meaning as Due-on-sale Provision.