Days on the Market / Active Days on Market

Period from the day property was listed, until it was sold or taken off the market.

Debit

Money taken from the bank account. Whenever you withdraw money, you debit your account.

Debit Bureau

Agency charged to track down individual bank accounts and document its entire information, such as: amount of savings, amount of money on debit and credit accounts, recent purchases, purchase history, non-payment, bills and other information. Retailers access debit bureau system whenever you slide you debit or credit card in a shop. Retailers send a request to the debit bureau and it responds back, giving a command to either accept or reject transaction.

Debit Card

Card used to access debit account(bank account), make purchases and withdraw money.

Debt

Debt refers to the amount of money owed to the bank, credit card company or any other entity.

Debtor

Person in debt to a financial institution.

Debt Consolidation / Debt elimination / Consolidation Loan

Combination of multiple mortgages, credit cards, car loans - into one big loan, which has lower monthly payments, but longer repayment period. Debt consolidation is an effective way to reduce monthly payments and bring more financial stability. For example, George has 3 credit cards, one mortgage and a car loan. He must pay monthly payments on all of his debts, otherwise he will have to face high interest payments or foreclosure on his house(bank taking away property due to non payment).

Debt Consolidation pays out all of George’s debts, to different lenders, and offers George one monthly payment, but over long period of time.

Debt Equity Ratio / Debt-Equity Ratio

Calculation that measures financial strength of a company. Debt/Equity Ratio takes all the debt and divides shareholder equity. Calculated number represents debt equity ratio.

Debt Issues

A debt issue is a term referred to the banks. Whenever a bank or another financial institution gives out a loan, sells bonds or other forms of debt, it means that the bank is issuing debt or debt issues.

Debt-to-Income Ratio / Debt to Income Ratio / DTI / Back-End Ratio / Back End Ratio / BER / Total Expense Ratio

Ratio used by lenders to calculate total amount that an individual is eligible for.
Debt-to-Income Ratio represents percentage of monthly income that goes towards paying off debt. The formula:  So if you earn $5000 per month and have mortgage and car payments totaling $2000, your debt to income ratio will be: 2000/5000 * 100 = 40. Meaning that 40% of your income goes towards paying off debt.

Lenders usually do not give out loans that require borrowers to pay more than 36% of their income towards the mortgage.

Debt security

In mortgage world, debt security refers to regular mortgage. This is a loan that was given to the borrower, for a fixed amount of money that must be repaid in a fixed period of time in exchange for borrowers property as a collateral.

Debt to Available Credit Ratio

This is the ratio that represents total amount of money that a person owes against total amount of money available on credit cards and credit lines. For example, Bill has 2 credit cards.

• On his first credit card Bill owes $500 and has $1500 available
• On his second credit card he owes $200 and has $800 available.

Calculated ratio on both credit cards, between debt and available funds constitutes debt to available credit ratio. Lenders analyze this ratio and estimate risks of lending money to that person. The rule of thumb is, the less you owe and the more you have on a credit card - the better.

Debt Service

Money needed to repay the mortgage together with interest.

Debt Service Coverage Ratio / Debt Coverage Ratio

Term used by banks in regards to commercial or business property. It calculates ratio between profits from a given property and loan expenses needed to pay off a loan that was taken to buy that property. For example, Ron bought an apartment complex by borrowing a loan from a bank. He borrowed $2.000.000. His monthly payment on that loan is $8.000. His property generates $15.000 in rental profits. The difference between profits and amount of money owed is the debt service coverage ratio. The bigger it is - the better.

Decreasing Term Assurance / Decreasing Term Insurance

Decreasing term assurance is a type of insurance on which monthly payments decrease over time. The assumption is – the longer you have the mortgage, the less money you owe to the lender. Hence, you insurance payments must decrease with time as well, since you will require less money in case of an emergency or death to pay out total mortgage balance. 

Deduction / Deductions

Governmental Tax breaks that are permitted by the government on certain expenses, usually business related. For example if you made a $100.000, where you had $8000 worth of expenses, you can subtract $100.000 – $8.000 and only pay taxes on $92.000.

Deed / Deed of Conveyance

Document which transfers property title(ownership) from one person to another.

Deed-in-lieu / Deed in Lieu / Deed-in-lieu of Foreclosure

A deed in lieu is an agreement between a borrower and a lender to transfer property to the lender because borrower cannot or is unwilling to pay his mortgage. Deed-in-lieu is different to the foreclosure as it releases borrowers from all the debt associated with a mortgage, while foreclosure gives lender the rights to ask for additional payments. Deed-in-lieu is voluntary and both sides must agree to it.

Deeds Release Fee

Deed release fee is usually charged when a mortgage is paid out or when you refinance a mortgage with another lender.

Deed of Trust / Trust Deed

Deed of Trust involves 3 parties. Borrower, Lender and a Trustee. Lender gives borrower money, while Trustee signs “Deed of Trust”. If borrower is unable to pay for the mortgage, Trustee, who signed deed of trust, will be responsible for selling borrowers property in order to repay debt.

Deck

Deck is an investment term, referring to the process of buying and selling futures and stock options. For example, broker gave a deck to buy out certain amount of stock options.

Default

When the borrower fails to pay for the mortgage or follow loan agreement. For example, Ron hasn’t paid for his mortgage for 3 months, meaning that he defaulted. Lender can start a process of foreclosure(taking Ron’s property as per contract).

Deflation

Deflation refers to decline in prices on almost every product. Deflation can be caused by shortage of credit and money supply and can lead to economic depression.

Defeasance

Agreement which gives borrower the ability to cancel loan contract by performing certain actions. Defeasance is only used in investing by means of buying new securities and increasing market value of the corporation.

Deferred interest / Deferred Interest Mortgage

Deferred interest refers to the process of making lower monthly payments(if contract allows) and simply adding the rest that had to be paid to the principal balance. For example, Ron has to pay $1000 every month, however he only paid $900. $100 by which he was short is added to the total balance of a mortgage. Deferred interest is used in negative amortization mortgages.

Deferment

The act of postponing something. For example, Ron was going to buy a house, but the seller decided to live in that house for 3 more months, making Ron wait and entering into deferment.

Deferred maintenance

Property maintenance which was held off, resulting in decreased value of that property.

Deadbeat

Mortgage and marketing slang, referring to a person who does not pay for the mortgage or for the credit cards, after multiple attempts to make that person pay were made.

Debtaholic

A person who cannot control her/his debt. Debtaholic also refers to people who have made multiple attempts to pull out of debt, but had no luck or got in debt again.

Delinquency / Delinquent Mortgage

When the borrower fails to pay monthly payments on time.

Demand Loan / Demand clause

Loan that must be repaid in full whenever lender demands it. A demand loan is used in predatory lending as a way to cheat people out of their homes. For example, predatory broker got George a mortgage, making sure that George did not go over the documents and signed them, trusting that broker. Lender can then request full payout on the mortgage after a number of years(making sure he made some money), taking possession of the property and leaving George without a home.

To protect yourself, make sure that there is no checkmark next to the “This loan has a demand feature” in your contract. Though ethical lenders may require or offer mortgages with a demand clause, it is best to avoid it.

Demand deposit

A type of account from which deposited money can be taken out, at any time, without a notice.

Demographics

Marketing term. Used to define people in certain markets by breaking them into groups. For example, a group between ages of 30-35, with income ranging from $30.000 – $50.000 with interest in sports, wife and one kid.

Demographics are used make marketing campaigns more effective.

Density

Population measurement on a specific piece of land. For example, if there are 1000 people living on 2000 square meters property, the density of that property is 1 person per 2 square meters.

Dependent

Someone who relies on another person for financial support. “Dependent” can refer to a child, parent or a spouse.

Deposit

A specific amount of money that is given to the seller in order to prove that the buyer is serious about buying that property. For example Ron is buying a house from Alex for $100.000. To prove that Ron is serious about buying that house, he must give Alex $2000 as a deposit.

Deposit-based Savings

Savings which are located in a deposit bank account(chequing) as opposed to savings account.

Deposit Insurance

An insurance that protects money in a deposit bank account(chequing) in case a bank goes bankrupt. Deposit insurance is usually run by governments or private companies appointed by the government.

Depreciation

Depreciation happens when real estate property losses its value due to age, poor maintenance or low market prices.

Depression

Economic crisis. In times of depression economies experience massive layoffs, unemployment, low prices, shortage of credit, etc.

Derivatives

Contracts which value is calculated from outside assets. Investors buying derivatives are essentially investing in future performance of assets. For example, cows give certain amount of milk. Investors currently like the profits that cows make with their milk and decide to invest in the farm, stating that they will need too see the same or higher profit rate from those cows, making derivative contracts.

Dimension Plans

Drawings or diagrams which detail property and visualize its location, number of rooms, footage, bathrooms and other details that help buyers visualize that property.

Direct Debit

An automatic bank account setting, where bank takes out monthly mortgage payment automatically, every month.

Direct Deposit / Direct Fund Transfers / DFT

Automatic money transfer from the payer to the payee’s bank account. For example, Ron works for YYY Company. Instead of giving Ron cheque every month, YYY Company transfers money directly into his account.

Direct deposit can be set up for: salary, wage based employment, tax benefits, refunds.

Direct Financing / Direct lender / Direct Loan

Getting mortgage without third party, for example – broker. Usually mortgage lending invlovles either one of the examples.

• Borrower – Borrower’s Broker – Lender
• Borrower – Lender’s Broker – Lender
• Borrower – Borrower’s Broker – Lender’s Broker – Lender

In a case of direct financing, lending chain looks like this:

• Borrower – Lender

With no third party in the middle. (direct loan, direct lender, direct financing)

Direct Tax / Direct Taxes

Taxes that are paid directly, for example – income tax. Indirect taxes are: interest rate taxes, business taxes etc.

Disability insurance

Insurance policy which takes care of monthly payments in case a person becomes permanently or temporarily disable. Disability insurance packages differ and depend entirely on premiums (monthly charges).

Disclosure

Statement that requires lenders to disclose all information about a loan, including taxes, commissions, fees, insurance and other charges. Lenders are required by law to disclose their mortgages.

Discount Point / Discount Points

Point equals to 1% of a mortgage. Discount points are payments to the lender which reduce interest rates. For example Ron wants to pay less interest. He can payout one point(1%) of the mortgage to do so. If his mortgage is $300.000, he will have to pay $3000.

Discount mortgage broker

Mortgage broker who can provide or get discounts on a loan. This may be lower interest rates, lower closing costs or lower fees.

Discounted Mortgage

Mortgage which offers discount on the principal, For example, if total amount owed is $100.000 you may buy discounted mortgage for $95.000. Discounted mortgages are attached to an index, that is, their interest rates may jump.

Discharge of Mortgage

Discharge of mortgage is a document that frees the borrower from his mortgage when it is has been repaid in full.

Discretionary ARM / Discretionary Adjustable Rate Mortgage / Discretionary Variable Rate Mortgage

Discretionary ARM is an adjustable rate mortgage, where the lender can change interest rates at any time, without any input from buyer and disregarding the market.

Disinflation

A decrease in inflation rate. Disinflation is good news, it means that money keep their value and buying power.

Distress

Lenders right to sell borrowers property due to non payment on his mortgage.

Distressed property

Property that is going through the process of foreclosure. Foreclosure – lender taking borrowers’ property due to nonpayment.

Disbursements

Payment that partially settles debt. For example, Ron owes $100.000 to the bank. He might want to reduce the amount he owes by paying $20.000 of extra cash he earned, making a disbursement.

Disaster Myopia

Insurance which protects against natural disasters.

Dividend

Distribution of earnings to shareholders. Whenever corporation makes X amount of profit, it must share it with the shareholders. A portion of the profit that goes to a single share holder is called dividend.

Diversification

Banking strategy of lending to different groups to ensure that bank assets are secure, consistent earnings come in, portfolio kept - all with minimum credit risk.

Document Needs List / Documentation requirements

Documents that a lender needs to give out a loan. Document requirement list includes: bank statements, credit report, tax returns, paychecks and more.

Document Preparation Fee

Fee charged for preparation of closing documents on a mortgage.

Domestic Banks

Banks originated in Canada. CIBC, TD, Scotia Bank, Bank of Montreal, Bank of Canada, etc.

Domicile

Person's permanent residence.

Down Payment / Downpayment

Amount of money given upfront on the loan. For example, Ron wants to buy a house for $200.000. His lender requires 20% down payment, meaning that Ron will have to pay his lender $40.000 down payment from his pocket, in order to get that loan.

20% down payment loan is called traditional loan. If you do not have 20% down payment, you can still get approved for a mortgage, but you will require private mortgage insurance.

Double Up / Doubleup

The option to make double payment on a regular payment day. For example Ron got extra cash. Instead of paying $500 that he must pay every month, he decides to double up and pay $1000.

Draw / Draw Mortgage

Draw is a construction mortgage, which is given in periodic chunks. For example construction firm agreed to borrow a total of $1.000.000.

It will first draw:

• $500.000 to buy the land.
• $200.000 upon purchase of the land, to build foundation for the building
• $200.000 for internal construction
• $100.000 for exterior works

This method secures construction firm in the case there are development problems on the way.

Draw Period

Timeframe for which the borrower can withdraw money from the credit line. For example, I can withdraw from February 2009 until October 2009. Once my draw period expires, my bank may request a full payout of the balance or extend the draw period.

Draw Down Facility

Draw down facility is a mortgage option, which allows you to withdraw money that you’ve paid out on your mortgage. For example, Ron has a $100.000 mortgage and paid out $30.000. He may go ahead and withdraw from the $30.000 he paid with draw down facility feature.

Dry Rot

A decay of wood, which causes wood to crumble.

Drywall

Cardboard wall that is used for making interior walls in a house.

Dual Agency

Agency that will work for both borrowers and lenders.

Due Diligence

Act of verification, double-checking. For example, before giving a loan, lender will perform a thorough check of the applicant (person who wants to borrow) which can also be called due diligence.

Dual Index Mortgage

Dual index mortgage is similar to an adjustable rate mortgage. Unlike an adjustable rate mortgage, dual index mortgage monthly payments depend on two factors. One is the current market interest rate another is the wage that the person is earning. In a case interest rates or wages go up or down, so will the monthly payment.

Due-on-sale Clause / Due on Sale Clause / Due-on-sale Provision / Due-on-transfer Provision

Contract provision that states that mortgage must be paid out in full when mortgaged property is sold.

Duplex

One building that has two residences with two separate entrances or one entrance to both residences.

Durable Power of Attorney / Power of Attorney

When a person(company) authorizes an attorney to fully represent that person and make decisions on their behalf, like signing cheques, buying, selling, management, etc.