D

Debt-to-Equity Ratio
The debt-to-equity ratio, also referred to as the loan-to-value ratio, is a rule used by banks requiring that a borrower invest a minimum amount of equity cash (usually 10% to 25% of the purchase price) as a condition to obtaining a mortgage. The rule is used in conjunction with the carrying-cost rule to determine how much money a bank will lend. A ratio of 1 means 100% leverage of a property, and higher than 1 means negative equity.

Debt Service
Debt Service is the cost of carrying a loan, usually through monthly payments, including the payment of interest and principal.

Debt-to-Income Ratio or Debt-Service Ratio
The debt-to-income ratio is the relationship of a borrower’s monthly payment obligation on long-term debts divided by gross monthly income, expressed as a percentage. It is also known as bottom ratio.

Deed in Lieu of Foreclosure
A deed in lieu of foreclosure is another option to avoid foreclosure. A deed in lieu is a transaction where the homeowner voluntarily transfers title to the property to the lender in exchange for a release from the mortgage obligation.

Deed Restriction
A deed restriction is a limitation on land use appearing in a deed.

Default
An act performed by the buyer, seller, tenant or landlord that breaches the contract of sale or lease and permits a claim for damages.

Defeasance Clause
A defeasance clause is a statement in a mortgage or deed of trust giving the borrower the right to redeem the title and have the mortgage lien released at any time prior to defaulting by paying the debt in full.

Depreciation
Depreciation is the expensing of the original cost of an asset, plus any qualified improvements, over its scheduled life as defined by the IRS. Depreciation deductions are permitted only for assets held by the production of income or used in a trade or business. The current term for depreciating residential real estate is 27.5 years.

Descent
Descent is the distribution of property to qualified heirs of one who has died intestate.

Disclosure and Informed Consent
Disclosure and informed consent is a real estate agent explaining his position in the agency relationship and the verbal and written consent of the relationship by the client.

Disclosure Statement
The disclosure statement is an accounting of all financial aspects of a mortgage loan required of lenders to borrowers in residential mortgage loan as regulated by the Federal Reserve Board.

Discount Points
Discount points are a one-time payment by the borrower to the lender at closing to obtain a lower interest rate on the mortgage loan. One point equals 1% of the loan amount; therefore, two points on a $100,000 mortgage would cost $2,000. It is also referred to as points.

Due Diligence
Due diligence is the investigation and review of a property to determine any legal liability.

Duplex
Two units under one roof. Usually side by side, but can be one on top of the other.