Mortgage Glossary
There are a lot of unfamiliar terms that get tossed around during the mortgage process. But don't worry, we've put together this glossary to help you get a better grasp of any terms that may be less than clear.
D
Deposit
Funds required by a lender in advance of the processing of a loan request. Generally a deposit is collected to cover the costs of an appraisal and credit report and may or may not be refundable.
Depreciation
A decline in the value of real or personal property. The opposite of appreciation.
Devise
A gift of real property by will or last testament.
Disburse
To pay out on the loan.
Disclosures
Information that must be given to consumers about their financial dealings.
Discount Points
Fees that are collected by the lender in exchange for a lower interest rate. Each discount point is 1% of the loan amount. For our comparison purposes, a discount point is considered to be a lender fee. To determine if it is wise to pay discount points to obtain a lower rate, you must compare the up front cost of the points to the monthly savings that result from obtaining the lower rate. Sometimes referred to as "points".
Discount Rate
The interest rate that the Federal Reserve charges member banks for loans, using government securities or eligible paper as collateral. This provides a floor on interest rates, since banks set their loan rates a notch above the discount rate.
Document Preparation
Lenders will prepare some of the legal documents that you will be signing at the time of closing, such as the mortgage, note, and truth-in-lending statement. This fee covers the expenses associated with the preparation of these documents. For our comparison purposes, the document preparation charges are considered to be a lender fee.
Documentary Stamp
A tax levied by some local or state governments at the time the deeds and mortgages are entered into public record. For our comparison purposes, documentary stamps are considered to be a tax and other unavoidable fee.
Dower
The rights of a widow in the property of her husband upon his death.
Down Payment
The portion of the purchase price of a property that the borrower will be paying in cash rather than included in the mortgage amount.
Draw Period
Generally associated with home equity lines of credit, the draw period is the period of time that you can access funds from the line. After the draw period expires, a repayment period generally follows.
Due-on-sale Clause
A provision in a mortgage that allows the lender to demand repayment in full, if the borrower sells the property that serves as security for the loan.
Durable Goods Orders
Economic indicator that measures new orders placed with domestic manufacturers for immediate and future delivery of factory hard-goods. Monthly percent changes reflect the rate of change of such orders. Levels of, and changes in, Durable Goods Orders are widely followed as an indicator of factory sector momentum. Frequency: Monthly Source: Commerce Department
E
Earnest Money
A sum of cash paid to a seller by a buyer prior to the closing to show that the buyer is serious about buying the house. The earnest money is deducted from the purchase price at closing and is not an additional cost. Sometimes referred to as a binder deposit.