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Mortgage glossary: Letter D |
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Debt Consolidation Paying off all or part of one's consumer debt with equity from a home. Debit consolidation can be part of a refinanced mortgage or a separate equity loan.
Debt Ratio Gross monthly payments divided by gross monthly income, expressed as a percentage. There are typically two debt ratios to be considered: The housing ratio sometimes called the frontend or front ratio is the total monthly house payment, plus any monthly tax, insurance, private mortgage insurance, or homeowners association dues, divided by gross monthly income. The total debt ratio also called the back-end or back ratio is the total housing payment plus other monthly consumer installment or revolving debt, also expressed as a percentage. Loan debt ratio guidelines are usually denoted as 32/38, with 32 being the front ratio and the 38 being the back ratio. Ratio guidelines can vary from loan to loan and lender to lender.
Deed A written document evidencing each transfer of ownership in a property.
Deed of Trust A written document giving an interest in the home being bought to a third party, usually the lender, as security to the lender.
Delinquent Being behind on a mortgage payment. Delinquencies typically begin to be recognized as 30 + days delinquent, 60 + days delinquent, and 90 + days delinquent.
Discount Points Also called "points" they are represented as a percentage of a loan amount. One point equals one percent of a loan balance. Borrowers pay discount points to reduce the interest rate for a mortgage. Typically each discount point paid reduces the interest rate by 1/4 percent. It is a form of prepaid interest to a lender.
Document Stamp Evidence usually with an ink stamp of how much tax was paid upon transfer of ownership of property. Certain states call it a doc stamp. Doc stamp tax rates can vary based upon locale, and not all states have doc stamps.
Down Payment The amount of money initially given by the borrower to close a mortgage. The down payment equals the sales price less financing. It's the very first bit of equity you'll have in the new home.
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