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Terms D-GDebt RatioThe allowable percentage of debt in relationship to a borrower's monthly income, it is used as an assessment for qualification for mortgage loans.Back Deed Of Trustn 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. DefaultFailure to meet an obligation of duty, such as to comply with timely
requirements of a mortgage. Deferred Interest MortgageA 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. Deficiency JudgmentA 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. DepositA 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. DepreciationA decline of value in real property brought about by age, physical
deterioration, functional or economic obsolescence. Discount BuydownThe paying of discount points to lower the interest rate temporarily or
permanently for a home purchaser. Discount PointsA 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. Discounted LoanWhen 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. DisintermediationA condition that occurs when funds are being withdrawn from savings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. Down PaymentThe 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 Earnest MoneyA 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. Effective AgeAn 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. 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. EquityA determination of the value a property owner has in real estate once the
obligations and costs of selling are deducted. Equity ParticipationAn 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. Equity SharingAny 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. EscrowIn 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. 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. Federal Housing Administration (FHA)A loan used to fill a gap in financing. It is usually a temporary
mortgage to help a borrower obtain the necessary cash funds to purchase
another home, prior to the sale of their currently owned home. Firm CommitmentA 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. Fixed-Rate MortgageThe 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. ForeclosureA 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. Free Standing StoreA 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 Fully Indexed Note RateThe 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%. Garden Apartmentspartment buildings that offer a unit that enjoys direct access to a lawn,
courtyard or other garden-like area. General Warranty DeedA deed containing a binding agreement whereby the seller agrees to
protect the buyer against being dispossessed because of any adverse claim
against the property. Government National Mortgage Association (GNMA)An additional individual who is both obligated on the loan and whose name
appears on all documents with equal legal obligations.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. 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). 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. 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. 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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