late charge
The penalty a borrower must pay when a payment
is made a stated number of days
(usually 15)
after the due date.
lease
A written agreement between the property owner
and a tenant that
stipulates the conditions
under which the tenant may possess the real
estate for a specified period of time and rent.
leasehold estate
A way of holding title to a property wherein the
mortgagor does not actually
own the property but
rather has a recorded long-term lease on it.
lease-purchase mortgage loan
An alternative financing option that allows low-
and moderate-income home
buyers to lease a home
from a nonprofit organization with an option to
buy.
Each month's rent payment consists of
principal, interest, taxes and insurance (PITI)
payments on the first mortgage plus an extra
amount that is earmarked for deposit
to a
savings account in which money for a down
payment
will accumulate.
legal description
A property description, recognized by law, that
is sufficient to locate and identify
the
property without oral testimony.
liabilities
A person's financial obligations. Liabilities
include long-term and short-term debt,
as well
as any other amounts that are owed to others.
liability insurance
Insurance coverage that offers protection
against claims alleging that a
property owner's
negligence or inappropriate action resulted in
bodily
injury or property damage to another
party.
lien
A legal claim against a property that must be
paid off when the property is sold.
lifetime payment cap
For an adjustable-rate mortgage (ARM), a limit
on the amount that payments can
increase or
decrease over the life of the mortgage. See cap.
lifetime rate cap
For an adjustable-rate mortgage (ARM), a limit
on the amount that the interest
rate can
increase or decrease over the life of the loan.
See cap.
line of credit
An agreement by a commercial bank or other
financial institution to extend
credit up to a
certain amount for a certain time to a specified
borrower.
See home equity line of credit.
liquid asset
A cash asset or an asset that is easily
converted into cash.
loan
A sum of borrowed money (principal) that is
generally repaid with interest.
loan commitment
See commitment letter.
loan origination
The process by which a mortgage lender brings
into existence a mortgage
secured by real
property.
loan-to-value (LTV) percentage
The relationship between the principal balance
of the mortgage and the
appraised value (or
sales price if it is lower) of the property. For
example,
a $100,000 home with an $80,000
mortgage has a LTV percentage of 80 percent.
lock-in
A written agreement in which the lender
guarantees a specified interest rate if
a
mortgage goes to closing within a set period of
time. The lock-in also usually
specifies the
number of points to be paid at closing.
lock-in period
The time period during which the lender has
guaranteed an interest rate to a borrower.
See
lock-in.
