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The D’s Of Real Estate

REAL ESTATE TERMS YOU MAY WANT TO KNOW WHEN BUYING OR SELLING A HOME IN THE ORLANDO AREA

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(Click A Letter Or Scroll Down To Find A Term Starting With That Letter)


Get to know the language of real estate to get better results when buying or selling a home in the Orlando area
 

Get To Know The “D’s” Of Real Estate

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+/- Debtor

The person or entity that borrows money. The term debtor may be used interchangeably with the term borrower.

+/- Debt-to-Income Ratio

a comparison or ratio of gross income to housing and non-housing expenses; With the FHA, the-monthly mortgage payment should be no more than 29% of monthly gross income (before taxes) and the mortgage payment combined with non-housing debts should not exceed 41% of income.

+/- Debt Security

a security that represents a loan from an investor to an issuer. The issuer in turn agrees to pay interest in addition to the principal amount borrowed.

+/- Debt Service Coverage

The requirement that earnings be a percentage or dollar sum higher than debt service.

+/- Deductible

the amount of cash payment that is made by the insured (the homeowner) to cover a portion of a damage or loss. Sometimes also called “out-of-pocket expenses.” For example, out of a total damage claim of $1,000, the homeowner might pay a $250 deductible toward the loss, while the insurance company pays $750 toward the loss. Typically, the higher the deductible, the lower the cost of the policy.

+/- Deed

a document that legally transfers ownership of property from one person to another. The deed is recorded on public record with the property description and the owner’s signature. Also known as the title.

+/- Deed-in-Lieu

to avoid foreclosure (“in lieu” of foreclosure), a deed is given to the lender to fulfill the obligation to repay the debt; this process does not allow the borrower to remain in the house but helps avoid the costs, time, and effort associated with foreclosure.

+/- Default

the inability to make timely monthly mortgage payments or otherwise comply with mortgage terms. A loan is considered in default when payment has not been paid after 60 to 90 days. Once in default the lender can exercise legal rights defined in the contract to begin foreclosure proceedings.

+/- Defeasance Clause

A clause in a mortgage that gives the mortgagor the right to redeem his or her property upon the payment of the mortgagor’s obligations to the mortgagee.

+/- Defeasible Fee

A fee simple absolute interest in land that is capable of being defeated, ended or terminated upon the happening of a specified event. Also known as Qualified Fee.

+/- Delinquency

failure of a borrower to make timely mortgage payments under a loan agreement. Generally after fifteen days a late fee may be assessed.

+/- Deposit (Earnest Money)

money put down by a potential buyer to show that they are serious about purchasing the home; it becomes part of the down payment if the offer is accepted, is returned if the offer is rejected, or is forfeited if the buyer pulls out of the deal. During the contingency period the money may be returned to the buyer if the contingencies are not met to the buyer’s satisfaction.

+/- Depreciation

a decrease in the value or price of a property due to changes in market conditions, wear and tear on the property, or other factors.

+/- Derivative

a contract between two or more parties where the security is dependent on the price of another investment.

+/- Disclosures

the release of relevant information about a property that may influence the final sale, especially if it represents defects or problems. “Full disclosure” usually refers to the responsibility of the seller to voluntarily provide all known information about the property. Some disclosures may be required by law, such as the federal requirement to warn of potential lead-based paint hazards in pre-1978 housing. A seller found to have knowingly lied about a defect may face legal penalties.

+/- Discount Point

normally paid at closing and generally calculated to be equivalent to 1% of the total loan amount, discount points are paid to reduce the interest rate on a loan. In an ARM with an initial rate discount, the lender gives up a number of percentage points in interest to give you a lower rate and lower payments for part of the mortgage term (usually for one year or less). After the discount period, the ARM rate will probably go up depending on the index rate.

+/- Down Payment

the portion of a home’s purchase price that is paid in cash and is not part of the mortgage loan. This amount varies based on the loan type, but is determined by taking the difference of the sale price and the actual mortgage loan amount. Mortgage insurance is required when a down payment less than 20 percent is made.

+/- Document Recording

after closing on a loan, certain documents are filed and made public record. Discharges for the prior mortgage holder are filed first. Then the deed is filed with the new owner’s and mortgage company’s names.

+/- Due on Sale Clause

a provision of a loan allowing the lender to demand full repayment of the loan if the property is sold.

+/- Duration

the number of years it will take to receive the present value of all future payments on a security to include both principal and interest.

Keep in mind that this is by no means a complete list of terms, but it does highlight most of the more common terms used in the industry and is a constant work in progress as time passes.

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If you have any questions whatsoever regarding the sale or purchase of a property in the Central Florida area please feel free to call or write me direct. My business hours are Monday thru Friday 9am – 6pm.

Thank you for choosing MORE Realty Services LLC as an information source for your Central Florida real estate needs.

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