Dead Equity:  Equity in property, not earning interest, not being used to acquire more property.

Debt:  An obligation owed by a borrower to a creditor.

Debtor:  One who owes money to another.

Debt Service:  The monthly payments required to keep the loans on a property current.

Decimal:  The period between numbers designating the difference between whole numbers and parts thereof.  Example:  1.1, wherein the first 1 is a whole number and the second 1 represents 1/10^th.  In this case there is one number to the right of the decimal.

Deed of Trust:  A security instrument which utilizes a neutral third party called a Trustee to foreclosure in the event of default.  This makes it generally faster and easier to foreclose on a Deed of Trust than on a Mortgage.

Default:  Violation of the terms and/or conditions of a note and security instrument.

Delinquent:  When payments are overdue, they are said to be delinquent.

Delta:  A Greek symbol shaped like a triangle, which  stands for change between two numbers.  Example: Delta % from 100 to 125 is 25% increase.

Discount:  A purchase price less than the remaining principal balance of a note.

Discounted Paper:  Real estate paper bought or sold at a price less than the principal balance.

Discounting:  The practice of adjusting the price of a note to compensate for other factors such as term, payments, interest rate, security, and needs of the seller.  The discount raises the yield to the buyer.

Discount Points:  A point is one percent of the principal amount.

Double Escrow:  Two separate but related escrows or closings, each contingent or dependent on the other.  Example: You are buying a note and reselling it immediately for profit.  The buy and resale escrows are contingent on each other and close at the exact same time.  See Simultaneous Closing.

Effective Interest Rate:  The overall yield earned on an investment, taking into account the discount and all existing loan terms.

End Buyer:  The person who purchases the real estate note you find.

Enter:  Putting a number or other information into the calculator.  An entry starts in the display and then is entered into the calculator inner workings for use.

Equity:  The amount left over after subtracting the loans from the value of the property.

Equity Cushion:  The margin of safety over and above a specific loan on a property.  A $100,000 property with $65,000 in loans would have a $35,000 equity cushion to protect the loans.

Escalation:  Rising loan payments as time goes on.

Escrow:  A neutral third party stakeholder that receives the instruments, contracts, documents and funds in a transaction as needed from both parties.  Escrow sees that the terms and conditions of the contract are fulfilled according to the escrow instructions.

Escrow Instructions:  Written instructions to an escrow officer, signed by both parties to a transaction.  This tells the escrow officer  exactly what to do to complete the transaction.

Escrow Officer:  The person responsible for administration of  the transactions in an escrow office.

Execution:  The legal signing of a document.  In order to record an instrument, a Notary Public must witness its execution.

Existing Financing:  The financing on a property before making any changes.  Example:  When looking for a property to buy, you arefirst interested in the existing financing.  See also Proposed Financing.

Extension Agreement:  A written agreement giving a debtor more time to pay on an obligation.

Face Amount:  The original principal balance appearing on the face of the note.  Be sure to check the current principal balance of a seasoned note because it may be drastically different than the face amount.

Financial Calculator:  A calculator designed for dealing in computations involving money, loans, payment and time.

First Loan:  (Note, Mortgage, Trust Deed):  The first loan to be recorded as a lien against a specific property (first in time and seniority).

Flipping:  Slang for referring a note to an investor and making a quick cash profit.

Foreclosure:  A judicial foreclosure is the means of enforcing one’s right to payment under a Mortgage.  The judge orders the property to be sold at auction and the proceeds used to pay the creditor.  A Trust Deed can be foreclosed by having the Trustee auction the property via Trustee’s Sale.

Free and Clear:  Property that has no loans on it whatsoever is free and clear.

Fully Amortized:  A loan whose payments include both interest and principal and will eventually be paid in full during its terms with no balloon payment.

FV:  Future Value.  The balloon payment of a loan or the loan balance as of some future date.