Mortgage Glossary

Debt-to-income Ratio:

A comparison of gross income to housing and non-housing expenses.  Traditionally, this ratio should not exceed 41%, but lenders offer much more liberal ratios to strong borrowers.

Deed:

The document that transfers ownership of a property.

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 pay monthly mortgage payments in a timely manner or to otherwise meet the mortgage terms.

Delinquency:

Failure of a borrower to make timely mortgage payments under a loan agreement.

Discount Point:

Normally paid at closing and generally calculated as a percentage of the total loan amount.  Discount points are paid to reduce the interest rate on a loan.

Down payment:

The portion of a homes purchase price that is paid in cash and is not part of the mortgage loan.